Is BLDP A Good Stock To Buy Now According To Hedge Funds?

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. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Ballard Power Systems Inc. (NASDAQ:BLDP).

Is BLDP a good stock to buy now? Investors who are in the know were taking an optimistic view. The number of long hedge fund positions advanced by 5 recently. Ballard Power Systems Inc. (NASDAQ:BLDP) was in 21 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BLDP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 16 hedge funds in our database with BLDP positions at the end of the second 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 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 66 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.

Ian Wace Marshall Wace

Ian Wace of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s check out the new hedge fund action regarding Ballard Power Systems Inc. (NASDAQ:BLDP).

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

At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in BLDP a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Among these funds, Marshall Wace LLP held the most valuable stake in Ballard Power Systems Inc. (NASDAQ:BLDP), which was worth $27 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $17.5 million worth of shares. Alyeska Investment Group, Lansdowne Partners, and Arosa Capital 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 Arosa Capital Management allocated the biggest weight to Ballard Power Systems Inc. (NASDAQ:BLDP), around 1.6% of its 13F portfolio. Arosa Capital Management is also relatively very bullish on the stock, earmarking 0.82 percent of its 13F equity portfolio to BLDP.

As aggregate interest increased, specific money managers were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, assembled the most valuable position in Ballard Power Systems Inc. (NASDAQ:BLDP). Alyeska Investment Group had $14.6 million invested in the company at the end of the quarter. Suzi Nutton (CEO)’s Lansdowne Partners also initiated a $14.1 million position during the quarter. The following funds were also among the new BLDP investors: Steve Cohen’s Point72 Asset Management, Louis Bacon’s Moore Global Investments, and Benjamin A. Smith’s Laurion Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ballard Power Systems Inc. (NASDAQ:BLDP) but similarly valued. We will take a look at Turning Point Therapeutics, Inc. (NASDAQ:TPTX), Equitrans Midstream Corporation (NYSE:ETRN), Amicus Therapeutics, Inc. (NASDAQ:FOLD), ONE Gas Inc (NYSE:OGS), Pilgrim’s Pride Corporation (NASDAQ:PPC), Varonis Systems Inc (NASDAQ:VRNS), and Hawaiian Electric Industries, Inc. (NYSE:HE). This group of stocks’ market values match BLDP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TPTX 24 659001 -6
ETRN 25 432077 -4
FOLD 38 1192283 6
OGS 19 24291 -1
PPC 18 50121 3
VRNS 29 527983 1
HE 19 56221 3
Average 24.6 420282 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $420 million. That figure was $123 million in BLDP’s case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Pilgrim’s Pride Corporation (NASDAQ:PPC) is the least popular one with only 18 bullish hedge fund positions. Ballard Power Systems Inc. (NASDAQ:BLDP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BLDP is 47.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on BLDP as the stock returned 22.1% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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