Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
BlackRock, Inc. (NYSE:BLK) investors should be aware of an increase in activity from the world’s largest hedge funds recently. BLK was in 40 hedge funds’ portfolios at the end of September. There were 31 hedge funds in our database with BLK holdings at the end of the previous quarter. Yes, the stock is steadily gaining more support from hedge funds that we track, but it is not that popular among the richest investors (and to see which companies are, check out the list of 30 stocks billionaires are crazy about: Insider Monkey billionaire stock index). Even thought not many billionaires are bullish on it, we will inspect it further to try to determine whether is worth purchasing or not.
To most shareholders, hedge funds are viewed as slow, old investment tools of years past. While there are more than 8000 funds trading today, our experts choose to focus on the elite of this group, about 700 funds. These money managers administer most of all hedge funds’ total capital, and by following their best equity investments, Insider Monkey has figured out a number of investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 26.1% since February 2017 even though the market was up nearly 19% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
In order to fully examine the potential BlackRock, Inc. has we looked through many reports, and we are here bringing VulcanValue Partner’s opinion on it:
“We were happy to add Blackrock to the portfolio this quarter. Blackrock is the world’s largest money manager with a vast array of offerings including active and passive strategies, equity and fixed income products, alternative strategies and many others. Their vast scale allows them to provide comprehensive solutions for institutional investors. Aladdin, Blackrock’s proprietary operating platform for investment management, is also an important part of their business as it enables effective risk management, efficient trading, and operational scale.Aladdin is used to manage over $18 trillion in assets and is licensed to over 25,000 investment professionals worldwide. With its diverse product offering, covering virtually every risk category, Blackrock has the ability to cross-sell such investment products to mitigate portfolio risks identified by Aladdin. Blackrock’s scale and associated liquidity, dominant brand, unrivaled technology platform, and diverse product portfolio are competitive advantages that insulate it from industry shifts in style or asset classes. The recent downward trend in flows due to macro uncertainties has provided the opportunity to buy this great company with a margin of safety.”
We’re going to take a gander at the latest hedge fund action surrounding BlackRock, Inc. (NYSE:BLK).
What does the smart money think about BlackRock, Inc. (NYSE:BLK)?
Heading into the fourth quarter of 2018, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BLK over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Two Sigma Advisors held the most valuable stake in BlackRock, Inc. (NYSE:BLK), which was worth $140.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $103.2 million worth of shares. Moreover, Citadel Investment Group, Markel Gayner Asset Management, and Adage Capital Management were also bullish on BlackRock, Inc. (NYSE:BLK), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, established the most outsized call position in BlackRock, Inc. (NYSE:BLK). Laurion Capital Management had $26.7 million invested in the company at the end of the quarter. Daniel Lascano’s Lomas Capital Management also made a $20.1 million investment in the stock during the quarter. The following funds were also among the new BLK investors: Peter Seuss’s Prana Capital Management, Ian Simm’s Impax Asset Management, and Malcolm Fairbairn’s Ascend Capital.
Let’s now take a look at hedge fund activity in other stocks similar to BlackRock, Inc. (NYSE:BLK). We will take a look at Charter Communications, Inc. (NASDAQ:CHTR), EOG Resources, Inc. (NYSE:EOG), The Bank of Nova Scotia (NYSE:BNS), and Invesco QQQ Trust (NASDAQ:QQQ). This group of stocks’ market valuations are closest to BLK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHTR | 67 | 8621116 | 11 |
| EOG | 37 | 952482 | 7 |
| BNS | 11 | 875002 | -3 |
| QQQ | 23 | 1072793 | 1 |
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $2.88 billion. That figure was $857 million in BLK’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 11 bullish hedge fund positions. BlackRock, Inc. (NYSE:BLK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CHTR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
