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BioLife Solutions, Inc. (BLFS): Hedge Fund Interest Cooling Off

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 24.4% during the first 9 months of 2019 and outperformed the broader market benchmark by 4 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

BioLife Solutions, Inc. (NASDAQ:BLFS) has seen a decrease in enthusiasm from smart money lately. BLFS was in 13 hedge funds’ portfolios at the end of the second quarter of 2019. There were 15 hedge funds in our database with BLFS holdings at the end of the previous quarter. Our calculations also showed that BLFS isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

BLFS_nov2019

In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Now we’re going to review the key hedge fund action encompassing BioLife Solutions, Inc. (NASDAQ:BLFS).

How are hedge funds trading BioLife Solutions, Inc. (NASDAQ:BLFS)?

At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BLFS over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Andrew Sandler

The largest stake in BioLife Solutions, Inc. (NASDAQ:BLFS) was held by Casdin Capital, which reported holding $39.4 million worth of stock at the end of March. It was followed by Sandler Capital Management with a $14.7 million position. Other investors bullish on the company included Driehaus Capital, Park West Asset Management, and Royce & Associates.

Judging by the fact that BioLife Solutions, Inc. (NASDAQ:BLFS) has experienced bearish sentiment from the smart money, we can see that there were a few money managers that slashed their positions entirely by the end of the second quarter. At the top of the heap, Benjamin A. Smith’s Laurion Capital Management said goodbye to the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $1.5 million in stock. Jordan Moelis and Jeff Farroni’s fund, Deep Field Asset Management, also dumped its stock, about $1.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BioLife Solutions, Inc. (NASDAQ:BLFS) but similarly valued. We will take a look at Concrete Pumping Holdings, Inc. (NASDAQ:BBCP), Kaleido BioSciences, Inc. (NASDAQ:KLDO), Greenlight Capital Re, Ltd. (NASDAQ:GLRE), and Source Capital, Inc. (NYSE:SOR). All of these stocks’ market caps resemble BLFS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBCP 10 58065 5
KLDO 5 12913 -1
GLRE 8 3855 5
SOR 2 7237 0
Average 6.25 20518 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $76 million in BLFS’s case. Concrete Pumping Holdings, Inc. (NASDAQ:BBCP) is the most popular stock in this table. On the other hand Source Capital, Inc. (NYSE:SOR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks BioLife Solutions, Inc. (NASDAQ:BLFS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BLFS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BLFS were disappointed as the stock returned -1.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

Disclosure: None. This article was originally published at Insider Monkey.

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