Last year's fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 37.4% in 2019 (through the end of November) and outperformed the S&P 500 ETF by 9.9 percentage points. We are done processing the latest 13F filings and in this article we will study how hedge fund sentiment towards Blackstone Mortgage Trust Inc (NYSE:BXMT) changed during the first quarter.
Blackstone Mortgage Trust Inc (NYSE:BXMT) investors should pay attention to a decrease in support from the world's most elite money managers of late. BXMT was in 15 hedge funds' portfolios at the end of the third quarter of 2019. There were 20 hedge funds in our database with BXMT positions at the end of the previous quarter. Our calculations also showed that BXMT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are perceived as slow, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open today, Our researchers hone in on the upper echelon of this group, about 750 funds. These hedge fund managers handle the majority of the smart money's total asset base, and by following their first-class picks, Insider Monkey has spotted a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to take a glance at the fresh hedge fund action regarding Blackstone Mortgage Trust Inc (NYSE:BXMT).
Hedge fund activity in Blackstone Mortgage Trust Inc (NYSE:BXMT)
At Q3's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2019. By comparison, 14 hedge funds held shares or bullish call options in BXMT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Blackstone Mortgage Trust Inc (NYSE:BXMT), with a stake worth $19.7 million reported as of the end of September. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $19.3 million. Millennium Management, Winton Capital Management, and AQR Capital Management 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 Unio Capital allocated the biggest weight to Blackstone Mortgage Trust Inc (NYSE:BXMT), around 0.22% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to BXMT.
Since Blackstone Mortgage Trust Inc (NYSE:BXMT) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that elected to cut their entire stakes by the end of the third quarter. Intriguingly, Charles Clough's Clough Capital Partners said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $18.9 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also dumped its stock, about $8.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Blackstone Mortgage Trust Inc (NYSE:BXMT) but similarly valued. We will take a look at 10x Genomics, Inc. (NASDAQ:TXG), Macy's, Inc. (NYSE:M), Western Alliance Bancorporation (NYSE:WAL), and Shell Midstream Partners LP (NYSE:SHLX). This group of stocks' market values match BXMT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TXG,19,135952,19 M,28,652339,-3 WAL,25,254686,-2 SHLX,6,12026,1 Average,19.5,263751,3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $264 million. That figure was $85 million in BXMT's case. Macy's, Inc. (NYSE:M) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 6 bullish hedge fund positions. Blackstone Mortgage Trust Inc (NYSE:BXMT) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BXMT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BXMT investors were disappointed as the stock returned 2.2% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.