At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Blackbaud, Inc. (NASDAQ:BLKB).
Is Blackbaud, Inc. (NASDAQ:BLKB) going to take off soon? Hedge funds are betting on the stock. The number of long hedge fund bets rose by 6 in recent months. Our calculations also showed that BLKB 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). BLKB was in 22 hedge funds’ portfolios at the end of March. There were 16 hedge funds in our database with BLKB positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are assumed to be slow, old investment vehicles of years past. While there are more than 8000 funds with their doors open today, Our researchers hone in on the leaders of this club, about 850 funds. Most estimates calculate that this group of people command most of the smart money’s total capital, and by keeping an eye on their unrivaled equity investments, Insider Monkey has revealed many investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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 look at the recent hedge fund action regarding Blackbaud, Inc. (NASDAQ:BLKB).
How have hedgies been trading Blackbaud, Inc. (NASDAQ:BLKB)?
Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in BLKB a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Echo Street Capital Management was the largest shareholder of Blackbaud, Inc. (NASDAQ:BLKB), with a stake worth $63.2 million reported as of the end of September. Trailing Echo Street Capital Management was Renaissance Technologies, which amassed a stake valued at $8.1 million. D E Shaw, Millennium Management, and GLG Partners were 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 Echo Street Capital Management allocated the biggest weight to Blackbaud, Inc. (NASDAQ:BLKB), around 1.36% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.37 percent of its 13F equity portfolio to BLKB.
As one would reasonably expect, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in Blackbaud, Inc. (NASDAQ:BLKB). Marshall Wace LLP had $1.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Peter Muller’s PDT Partners, and Hoon Kim’s Quantinno Capital.
Let’s also examine hedge fund activity in other stocks similar to Blackbaud, Inc. (NASDAQ:BLKB). These stocks are Sanderson Farms, Inc. (NASDAQ:SAFM), GW Pharmaceuticals plc (NASDAQ:GWPH), Schrodinger, Inc. (NASDAQ:SDGR), and H&R Block, Inc. (NYSE:HRB). This group of stocks’ market values are similar to BLKB’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 18 hedge funds with bullish positions and the average amount invested in these stocks was $328 million. That figure was $108 million in BLKB’s case. GW Pharmaceuticals plc (NASDAQ:GWPH) is the most popular stock in this table. On the other hand Schrodinger, Inc. (NASDAQ:SDGR) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Blackbaud, Inc. (NASDAQ:BLKB) 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. Unfortunately BLKB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BLKB were disappointed as the stock returned 5.2% during the second quarter (through June 10th) 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.