Were Hedge Funds Right About Dumping BlackBerry Limited (BB)?

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not BlackBerry Limited (NYSE:BB) makes for a good investment right now.

BlackBerry Limited (NYSE:BB) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 31. BB investors should be aware of a decrease in enthusiasm from smart money recently. There were 24 hedge funds in our database with BB holdings at the end of March. Our calculations also showed that BB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. With all of this in mind we’re going to analyze the key hedge fund action encompassing BlackBerry Limited (NYSE:BB).

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

At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in BB over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fairfax Financial Holdings held the most valuable stake in BlackBerry Limited (NYSE:BB), which was worth $571 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $33.3 million worth of shares. D E Shaw, Kahn Brothers, and Citadel Investment Group 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 Fairfax Financial Holdings allocated the biggest weight to BlackBerry Limited (NYSE:BB), around 18.37% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, designating 3.08 percent of its 13F equity portfolio to BB.

Seeing as BlackBerry Limited (NYSE:BB) has faced a decline in interest from hedge fund managers, it’s easy to see that there exists a select few hedgies that decided to sell off their entire stakes by the end of the second quarter. Interestingly, Joseph Samuels’s Islet Management dropped the biggest stake of all the hedgies tracked by Insider Monkey, worth an estimated $9.3 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund dropped about $2.6 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks similar to BlackBerry Limited (NYSE:BB). We will take a look at Leggett & Platt, Inc. (NYSE:LEG), Post Holdings Inc (NYSE:POST), Bumble Inc. (NASDAQ:BMBL), Fastly, Inc. (NYSE:FSLY), Boyd Gaming Corporation (NYSE:BYD), Alcoa Corporation (NYSE:AA), and Dada Nexus Limited (NASDAQ:DADA). All of these stocks’ market caps are closest to BB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $702 million. That figure was $732 million in BB’s case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand Leggett & Platt, Inc. (NYSE:LEG) is the least popular one with only 14 bullish hedge fund positions. BlackBerry Limited (NYSE:BB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BB is 30.4. 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 negative signal and 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 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately BB wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BB investors were disappointed as the stock returned -9.6% since the end of June (through 11/5) 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 most of these stocks already outperformed the market in 2021.

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

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