Were Hedge Funds Right About Piling Into The Blackstone Group (BX)?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of The Blackstone Group Inc. (NYSE:BX) based on that data.

The Blackstone Group Inc. (NYSE:BX) has seen an increase in activity from the world’s largest hedge funds of late. The Blackstone Group Inc. (NYSE:BX) was in 54 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 49 hedge funds in our database with BX holdings at the end of September. Our calculations also showed that BX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

John Armitage Egerton Capital

John Armitage of Egerton Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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 let’s analyze the recent hedge fund action encompassing The Blackstone Group Inc. (NYSE:BX).

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

At fourth quarter’s end, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BX over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in The Blackstone Group Inc. (NYSE:BX) was held by Farallon Capital, which reported holding $252.2 million worth of stock at the end of December. It was followed by D E Shaw with a $138.3 million position. Other investors bullish on the company included Cryder Capital, Millennium Management, and Egerton Capital Limited. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to The Blackstone Group Inc. (NYSE:BX), around 9.84% of its 13F portfolio. Cryder Capital is also relatively very bullish on the stock, earmarking 9.39 percent of its 13F equity portfolio to BX.

Consequently, specific money managers have jumped into The Blackstone Group Inc. (NYSE:BX) headfirst. D1 Capital Partners, managed by Daniel Sundheim, created the most outsized position in The Blackstone Group Inc. (NYSE:BX). D1 Capital Partners had $81.7 million invested in the company at the end of the quarter. Renaissance Technologies also made a $45.2 million investment in the stock during the quarter. The other funds with brand new BX positions are James Parsons’s Junto Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Alex von Furstenberg and Mal Serure’s Arrow Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Blackstone Group Inc. (NYSE:BX) but similarly valued. We will take a look at NXP Semiconductors NV (NASDAQ:NXPI), Peloton Interactive, Inc. (NASDAQ:PTON), Vodafone Group Plc (NASDAQ:VOD), Palantir Technologies Inc. (NYSE:PLTR), Cognizant Technology Solutions Corp (NASDAQ:CTSH), Ross Stores, Inc. (NASDAQ:ROST), and Twitter Inc (NYSE:TWTR). This group of stocks’ market values are closest to BX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NXPI 66 2259680 -2
PTON 63 5666462 5
VOD 17 745457 -5
PLTR 38 1902514 7
CTSH 46 3517450 1
ROST 57 1308907 11
TWTR 78 2777387 3
Average 52.1 2596837 2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 52.1 hedge funds with bullish positions and the average amount invested in these stocks was $2597 million. That figure was $1450 million in BX’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 17 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 70.3. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on BX as the stock returned 39.7% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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