Is BLKB 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 Blackbaud, Inc. (NASDAQ:BLKB).

Is BLKB a good stock to buy now? Blackbaud, Inc. (NASDAQ:BLKB) investors should pay attention to an increase in support from the world’s most elite money managers lately. Blackbaud, Inc. (NASDAQ:BLKB) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that BLKB 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Paul Tudor Jones of Tudor Investment Corp

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. Now we’re going to take a glance at the new hedge fund action surrounding Blackbaud, Inc. (NASDAQ:BLKB).

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

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the second quarter of 2020. On the other hand, there were a total of 14 hedge funds with a bullish position in BLKB a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

More specifically, Citadel Investment Group was the largest shareholder of Blackbaud, Inc. (NASDAQ:BLKB), with a stake worth $11.4 million reported as of the end of September. Trailing Citadel Investment Group was Marshall Wace LLP, which amassed a stake valued at $9.9 million. AQR Capital Management, D E Shaw, 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 Weld Capital Management allocated the biggest weight to Blackbaud, Inc. (NASDAQ:BLKB), around 0.33% of its 13F portfolio. Gotham Asset Management is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to BLKB.

Now, key hedge funds have jumped into Blackbaud, Inc. (NASDAQ:BLKB) headfirst. Millennium Management, managed by Israel Englander, established the largest position in Blackbaud, Inc. (NASDAQ:BLKB). Millennium Management had $7.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Minhua Zhang’s Weld Capital Management, Mika Toikka’s AlphaCrest Capital Management, and Michael Gelband’s ExodusPoint Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Blackbaud, Inc. (NASDAQ:BLKB) but similarly valued. We will take a look at Valley National Bancorp (NASDAQ:VLY), eXp World Holdings, Inc. (NASDAQ:EXPI), American States Water Co (NYSE:AWR), Bank OZK (NASDAQ:OZK), Synaptics Incorporated (NASDAQ:SYNA), WPX Energy Inc (NYSE:WPX), and AMN Healthcare Services Inc (NYSE:AMN). 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
VLY 21 38853 4
EXPI 14 111222 3
AWR 21 54964 1
OZK 20 178260 3
SYNA 23 370429 -5
WPX 29 225279 -8
AMN 16 72881 -5
Average 20.6 150270 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $75 million in BLKB’s case. WPX Energy Inc (NYSE:WPX) is the most popular stock in this table. On the other hand eXp World Holdings, Inc. (NASDAQ:EXPI) is the least popular one with only 14 bullish hedge fund positions. Blackbaud, Inc. (NASDAQ:BLKB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BLKB is 59. 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 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 beat the market again by 15.8 percentage points. Unfortunately BLKB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BLKB were disappointed as the stock returned 2.6% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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