In this article we will take a look at whether hedge funds think Blueprint Medicines Corporation (NASDAQ:BPMC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Blueprint Medicines Corporation (NASDAQ:BPMC) a healthy stock for your portfolio? Hedge funds are taking a bearish view. The number of long hedge fund bets were cut by 1 lately. Our calculations also showed that BPMC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). BPMC was in 36 hedge funds’ portfolios at the end of the first quarter of 2020. There were 37 hedge funds in our database with BPMC positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the fresh hedge fund action encompassing Blueprint Medicines Corporation (NASDAQ:BPMC).
How are hedge funds trading Blueprint Medicines Corporation (NASDAQ:BPMC)?
Heading into the second quarter of 2020, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BPMC over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Blueprint Medicines Corporation (NASDAQ:BPMC) was held by Hillhouse Capital Management, which reported holding $94.3 million worth of stock at the end of September. It was followed by Viking Global with a $93.6 million position. Other investors bullish on the company included Casdin Capital, Healthcor Management LP, and Cadian Capital. In terms of the portfolio weights assigned to each position Foresite Capital allocated the biggest weight to Blueprint Medicines Corporation (NASDAQ:BPMC), around 15.82% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, designating 9.62 percent of its 13F equity portfolio to BPMC.
Due to the fact that Blueprint Medicines Corporation (NASDAQ:BPMC) has experienced falling interest from the smart money, logic holds that there were a few hedgies that slashed their entire stakes by the end of the third quarter. Intriguingly, Steve Cohen’s Point72 Asset Management sold off the largest investment of all the hedgies monitored by Insider Monkey, totaling close to $16.8 million in stock, and Mark Lampert’s Biotechnology Value Fund / BVF Inc was right behind this move, as the fund dropped about $14.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Blueprint Medicines Corporation (NASDAQ:BPMC) but similarly valued. We will take a look at Western Alliance Bancorporation (NYSE:WAL), Darling Ingredients Inc. (NYSE:DAR), Glacier Bancorp, Inc. (NASDAQ:GBCI), and ALLETE Inc (NYSE:ALE). This group of stocks’ market values match BPMC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $762 million in BPMC’s case. Western Alliance Bancorporation (NYSE:WAL) is the most popular stock in this table. On the other hand Glacier Bancorp, Inc. (NASDAQ:GBCI) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Blueprint Medicines Corporation (NASDAQ:BPMC) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately BPMC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BPMC were disappointed as the stock returned 11.4% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.