Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of bluebird bio Inc (NASDAQ:BLUE) based on that data.
Is bluebird bio Inc (NASDAQ:BLUE) the right pick for your portfolio? The best stock pickers were becoming less hopeful. The number of long hedge fund bets fell by 2 recently. bluebird bio Inc (NASDAQ:BLUE) was in 35 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 38. Our calculations also showed that BLUE 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 eyes of most traders, hedge funds are seen as unimportant, old investment tools of yesteryear. While there are over 8000 funds trading at the moment, Our researchers choose to focus on the crème de la crème of this group, approximately 850 funds. It is estimated that this group of investors manage most of the hedge fund industry’s total capital, and by tailing their matchless stock picks, Insider Monkey has come up with a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 under the radar cannabis 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. With all of this in mind let’s review the latest hedge fund action regarding bluebird bio Inc (NASDAQ:BLUE).
Do Hedge Funds Think BLUE Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in BLUE a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in bluebird bio Inc (NASDAQ:BLUE) was held by Camber Capital Management, which reported holding $59.3 million worth of stock at the end of September. It was followed by Casdin Capital with a $49.4 million position. Other investors bullish on the company included Armistice Capital, Platinum Asset Management, and D E Shaw. In terms of the portfolio weights assigned to each position Camber Capital Management allocated the biggest weight to bluebird bio Inc (NASDAQ:BLUE), around 3.13% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, dishing out 2.21 percent of its 13F equity portfolio to BLUE.
Due to the fact that bluebird bio Inc (NASDAQ:BLUE) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few funds who were dropping their full holdings in the third quarter. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management cut the largest position of the 750 funds monitored by Insider Monkey, valued at an estimated $22.9 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dumped its stock, about $16.7 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as bluebird bio Inc (NASDAQ:BLUE) but similarly valued. We will take a look at TCF Financial Corporation (NYSE:TCF), Flowserve Corporation (NYSE:FLS), Canada Goose Holdings Inc. (NYSE:GOOS), Southwest Gas Holdings, Inc. (NYSE:SWX), Valvoline Inc. (NYSE:VVV), National Oilwell Varco, Inc. (NYSE:NOV), and MSC Industrial Direct Co Inc (NYSE:MSM). This group of stocks’ market valuations match BLUE’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $269 million. That figure was $322 million in BLUE’s case. Valvoline Inc. (NYSE:VVV) is the most popular stock in this table. On the other hand TCF Financial Corporation (NYSE:TCF) is the least popular one with only 11 bullish hedge fund positions. bluebird bio Inc (NASDAQ:BLUE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BLUE is 80.6. 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 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately BLUE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BLUE were disappointed as the stock returned -17.1% since the end of September (through 12/18) 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.