Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 fourth 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 4 years and analyze what the smart money thinks of The Blackstone Group Inc. (BX) (NYSE:BX) based on that data.
Is The Blackstone Group Inc. (BX) (NYSE:BX) a great investment today? Prominent investors are in a bullish mood. The number of bullish hedge fund bets moved up by 5 lately. Our calculations also showed that BX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of tools shareholders put to use to value publicly traded companies. A duo of the most innovative tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can trounce their index-focused peers by a healthy margin (see the details here).
John Armitage of Egerton Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind we’re going to take a glance at the recent hedge fund action encompassing The Blackstone Group Inc. (BX) (NYSE:BX).
What have hedge funds been doing with The Blackstone Group Inc. (BX) (NYSE:BX)?
At the end of the fourth quarter, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the third quarter of 2019. On the other hand, there were a total of 33 hedge funds with a bullish position in BX a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in The Blackstone Group Inc. (BX) (NYSE:BX) was held by Egerton Capital Limited, which reported holding $381 million worth of stock at the end of September. It was followed by HMI Capital with a $122.8 million position. Other investors bullish on the company included GQG Partners, D E Shaw, and Chilton Investment Company. In terms of the portfolio weights assigned to each position HMI Capital allocated the biggest weight to The Blackstone Group Inc. (BX) (NYSE:BX), around 9.79% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, dishing out 8.26 percent of its 13F equity portfolio to BX.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Heard Capital, managed by William Heard, assembled the most valuable position in The Blackstone Group Inc. (BX) (NYSE:BX). Heard Capital had $16.5 million invested in the company at the end of the quarter. Pasco Alfaro / Richard Tumure’s Miura Global Management also made a $8.7 million investment in the stock during the quarter. The other funds with brand new BX positions are Travis Cocke’s Voss Capital, Joseph Samuels’s Islet Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Blackstone Group Inc. (BX) (NYSE:BX) but similarly valued. These stocks are T-Mobile US, Inc. (NASDAQ:TMUS), The Southern Company (NYSE:SO), S&P Global Inc. (NYSE:SPGI), and Duke Energy Corporation (NYSE:DUK). This group of stocks’ market values resemble BX’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TMUS,61,1396533,-3 SO,30,866429,-3 SPGI,76,3764961,1 DUK,37,1534613,5 Average,51,1890634,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 51 hedge funds with bullish positions and the average amount invested in these stocks was $1891 million. That figure was $1193 million in BX’s case. S&P Global Inc. (NYSE:SPGI) is the most popular stock in this table. On the other hand The Southern Company (NYSE:SO) is the least popular one with only 30 bullish hedge fund positions. The Blackstone Group Inc. (BX) (NYSE:BX) is not the least popular stock in this group but hedge fund interest is still below average. 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 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on BX, though not to the same extent, as the stock returned -14.5% during the same time period and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.