In this article we will check out the progression of hedge fund sentiment towards Blink Charging Co. (NASDAQ:BLNK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in Blink Charging Co. (NASDAQ:BLNK) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Acorda Therapeutics Inc (NASDAQ:ACOR), AmeriServ Financial, Inc. (NASDAQ:ASRV), and Travelzoo (NASDAQ:TZOO) to gather more data points. Our calculations also showed that BLNK 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s review the recent hedge fund action regarding Blink Charging Co. (NASDAQ:BLNK).
How are hedge funds trading Blink Charging Co. (NASDAQ:BLNK)?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in BLNK a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Blink Charging Co. (NASDAQ:BLNK), with a stake worth $0.1 million reported as of the end of September. Trailing Renaissance Technologies was Ionic Capital Management, which amassed a stake valued at $0.1 million. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ionic Capital Management allocated the biggest weight to Blink Charging Co. (NASDAQ:BLNK), around 0.09% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to BLNK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: 999. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Ionic Capital Management).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Blink Charging Co. (NASDAQ:BLNK) but similarly valued. These stocks are Acorda Therapeutics Inc (NASDAQ:ACOR), AmeriServ Financial, Inc. (NASDAQ:ASRV), Travelzoo (NASDAQ:TZOO), and Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA). This group of stocks’ market valuations resemble BLNK’s market valuation.
|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 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $0 million in BLNK’s case. Travelzoo (NASDAQ:TZOO) is the most popular stock in this table. On the other hand AmeriServ Financial, Inc. (NASDAQ:ASRV) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Blink Charging Co. (NASDAQ:BLNK) is even less popular than ASRV. Hedge funds dodged a bullet by taking a bearish stance towards BLNK. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately BLNK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BLNK investors were disappointed as the stock returned -3.5% during the second quarter (through May 22nd) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.