Hedge Funds Have Never Been This Bullish On BlackLine, Inc. (BL)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards BlackLine, Inc. (NASDAQ:BL).

BlackLine, Inc. (NASDAQ:BL) was in 24 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. BL investors should be aware of an increase in hedge fund interest lately. There were 23 hedge funds in our database with BL positions at the end of the fourth quarter. Our calculations also showed that BL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s check out the new hedge fund action surrounding BlackLine, Inc. (NASDAQ:BL).

Do Hedge Funds Think BL Is A Good Stock To Buy Now?

At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in BL a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, D E Shaw was the largest shareholder of BlackLine, Inc. (NASDAQ:BL), with a stake worth $74.9 million reported as of the end of March. Trailing D E Shaw was Harbor Spring Capital, which amassed a stake valued at $40.5 million. Toronado Partners, Renaissance Technologies, and Millennium Management 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 Toronado Partners allocated the biggest weight to BlackLine, Inc. (NASDAQ:BL), around 10.69% of its 13F portfolio. Harbor Spring Capital is also relatively very bullish on the stock, earmarking 5.75 percent of its 13F equity portfolio to BL.

As aggregate interest increased, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the most outsized position in BlackLine, Inc. (NASDAQ:BL). Millennium Management had $23.7 million invested in the company at the end of the quarter. Robert Henry Lynch’s Aristeia Capital also made a $6.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Daniel S. Och’s OZ Management, and Steve Zheng’s Deepcurrents Investment Group.

Let’s now take a look at hedge fund activity in other stocks similar to BlackLine, Inc. (NASDAQ:BL). We will take a look at Terminix Global Holdings, Inc. (NYSE:TMX), Sana Biotechnology, Inc. (NASDAQ:SANA), BWX Technologies Inc (NYSE:BWXT), Reynolds Consumer Products Inc. (NASDAQ:REYN), Silicon Laboratories Inc. (NASDAQ:SLAB), First American Financial Corp (NYSE:FAF), and CACI International Inc (NYSE:CACI). This group of stocks’ market valuations are similar to BL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TMX 27 456007 -3
SANA 15 158923 15
BWXT 16 154661 -3
REYN 19 153098 1
SLAB 18 142253 0
FAF 32 964771 -7
CACI 21 632278 -7
Average 21.1 380284 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $380 million. That figure was $272 million in BL’s case. First American Financial Corp (NYSE:FAF) is the most popular stock in this table. On the other hand Sana Biotechnology, Inc. (NASDAQ:SANA) is the least popular one with only 15 bullish hedge fund positions. BlackLine, Inc. (NASDAQ:BL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BL is 62.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately BL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BL were disappointed as the stock returned 1.4% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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