In this article we will analyze whether The Blackstone Group Inc. (NYSE:BX) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is BX a good stock to buy now? The Blackstone Group Inc. (NYSE:BX) has experienced an increase in enthusiasm from smart money of late. The Blackstone Group Inc. (NYSE:BX) was in 49 hedge funds’ portfolios at the end of September. The all time high for this statistic is 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 47 hedge funds in our database with BX holdings at the end of June. Our calculations also showed that BX 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.
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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this cannabis tech stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Keeping this in mind we’re going to take a peek at the new hedge fund action regarding The Blackstone Group Inc. (NYSE:BX).
Do Hedge Funds Think BX Is A Good Stock To Buy Now?
At the end of September, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BX over the last 21 quarters. So, let’s find out 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, Farallon Capital has the number one position in The Blackstone Group Inc. (NYSE:BX), worth close to $199.9 million, corresponding to 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is HMI Capital, managed by Mick Hellman, which holds a $173.3 million position; the fund has 7.2% of its 13F portfolio invested in the stock. Other peers that are bullish contain Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and Ferdinand Groos’s Cryder Capital. In terms of the portfolio weights assigned to each position Kingstown Capital Management allocated the biggest weight to The Blackstone Group Inc. (NYSE:BX), around 12.86% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, earmarking 9.93 percent of its 13F equity portfolio to BX.
Consequently, key money managers have jumped into The Blackstone Group Inc. (NYSE:BX) headfirst. Maverick Capital, managed by Lee Ainslie, initiated the most outsized position in The Blackstone Group Inc. (NYSE:BX). Maverick Capital had $85.3 million invested in the company at the end of the quarter. Stephen J. Errico’s Locust Wood Capital Advisers also made a $37.8 million investment in the stock during the quarter. The other funds with brand new BX positions are Steve Cohen’s Point72 Asset Management, Michael Blitzer’s Kingstown Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Blackstone Group Inc. (NYSE:BX) but similarly valued. These stocks are SBA Communications Corporation (NASDAQ:SBAC), Las Vegas Sands Corp. (NYSE:LVS), Baidu, Inc. (NASDAQ:BIDU), Ambev SA (NYSE:ABEV), Vodafone Group Plc (NASDAQ:VOD), Twilio Inc. (NYSE:TWLO), and ConocoPhillips (NYSE:COP). This group of stocks’ market caps match BX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 41.7 hedge funds with bullish positions and the average amount invested in these stocks was $1726 million. That figure was $1296 million in BX’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 21 bullish hedge fund positions. The Blackstone Group Inc. (NYSE:BX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BX is 65. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on BX as the stock returned 20.8% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.