Is Black Knight (BKI) Stock A Buy or Sell?

In this article we will take a look at whether hedge funds think Black Knight, Inc. (NYSE:BKI) 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 BKI stock a buy or sell? Black Knight, Inc. (NYSE:BKI) was in 44 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 45. BKI has seen an increase in hedge fund sentiment of late. There were 41 hedge funds in our database with BKI positions at the end of the third quarter. Our calculations also showed that BKI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the 21st century investor’s toolkit there are many gauges shareholders can use to assess publicly traded companies. Some of the most underrated gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce their index-focused peers by a solid margin (see the details here).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article). Now let’s take a glance at the recent hedge fund action regarding Black Knight, Inc. (NYSE:BKI).

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

At the end of the fourth quarter, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in BKI 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.

Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Black Knight, Inc. (NYSE:BKI). D E Shaw has a $217.7 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Third Point, managed by Dan Loeb, which holds a $154.6 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish encompass Ken Griffin’s Citadel Investment Group, Greg Poole’s Echo Street Capital Management and James Parsons’s Junto Capital Management. In terms of the portfolio weights assigned to each position Banbury Partners allocated the biggest weight to Black Knight, Inc. (NYSE:BKI), around 7.69% of its 13F portfolio. Aravt Global is also relatively very bullish on the stock, dishing out 7.3 percent of its 13F equity portfolio to BKI.

As industrywide interest jumped, some big names were leading the bulls’ herd. Islet Management, managed by Joseph Samuels, established the most valuable position in Black Knight, Inc. (NYSE:BKI). Islet Management had $8.8 million invested in the company at the end of the quarter. Joseph Cornell’s Bluegrass Capital Partners also made a $7.1 million investment in the stock during the quarter. The other funds with brand new BKI positions are Donald Sussman’s Paloma Partners, Usman Waheed’s Strycker View Capital, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Black Knight, Inc. (NYSE:BKI). We will take a look at Natura &Co Holding S.A. (NYSE:NTCO), Sunrun Inc (NASDAQ:RUN), iQIYI, Inc. (NASDAQ:IQ), VICI Properties Inc. (NYSE:VICI), Principal Financial Group Inc (NASDAQ:PFG), Eastman Chemical Company (NYSE:EMN), and Discovery Inc. (NASDAQ:DISCA). This group of stocks’ market values match BKI’s market value.

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As you can see these stocks had an average of 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $798 million. That figure was $995 million in BKI’s case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 4 bullish hedge fund positions. Black Knight, Inc. (NYSE:BKI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BKI is 82.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately BKI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on BKI were disappointed as the stock returned -16.8% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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