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In this article we will analyze whether Berkeley Lights, Inc. (NASDAQ:BLI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is BLI a good stock to buy now? Hedge funds were taking an optimistic view. The number of bullish hedge fund bets improved by 10 recently. Berkeley Lights, Inc. (NASDAQ:BLI) was in 10 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that BLI 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.
To most shareholders, hedge funds are perceived as worthless, old investment tools of years past. While there are greater than 8000 funds in operation today, Our experts choose to focus on the aristocrats of this club, about 850 funds. These hedge fund managers oversee the lion's share of the smart money's total asset base, and by shadowing their finest equity investments, Insider Monkey has formulated many investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum 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 .
Lei Zhang of Hillhouse Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we're going to take a look at the latest hedge fund action encompassing Berkeley Lights, Inc. (NASDAQ:BLI).
Do Hedge Funds Think BLI Is A Good Stock To Buy Now?
At Q3's end, a total of 10 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 BLI over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Hillhouse Capital Management was the largest shareholder of Berkeley Lights, Inc. (NASDAQ:BLI), with a stake worth $15.3 million reported as of the end of September. Trailing Hillhouse Capital Management was Casdin Capital, which amassed a stake valued at $15.3 million. Cota Capital, Citadel Investment Group, and Alyeska 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 Cota Capital allocated the biggest weight to Berkeley Lights, Inc. (NASDAQ:BLI), around 4.13% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, designating 0.68 percent of its 13F equity portfolio to BLI.
Now, specific money managers have jumped into Berkeley Lights, Inc. (NASDAQ:BLI) headfirst. Hillhouse Capital Management, managed by Lei Zhang, initiated the most outsized position in Berkeley Lights, Inc. (NASDAQ:BLI). Hillhouse Capital Management had $15.3 million invested in the company at the end of the quarter. Eli Casdin's Casdin Capital also initiated a $15.3 million position during the quarter. The other funds with new positions in the stock are Bobby Yazdani and Babak Poushanchi's Cota Capital, Ken Griffin's Citadel Investment Group, and Anand Parekh's Alyeska Investment Group.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Berkeley Lights, Inc. (NASDAQ:BLI) but similarly valued. These stocks are AppFolio Inc (NASDAQ:APPF), Globus Medical Inc (NYSE:GMED), Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), Landstar System, Inc. (NASDAQ:LSTR), Descartes Systems Group (NASDAQ:DSGX), American Campus Communities, Inc. (NYSE:ACC), and Sasol Limited (NYSE:SSL). All of these stocks' market caps are closest to BLI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APPF,26,336756,5 GMED,33,100676,1 IOVA,40,1475319,-3 LSTR,23,210116,0 DSGX,12,212088,2 ACC,21,349316,-5 SSL,5,31702,-5 Average,22.9,387996,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $53 million in BLI's case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 5 bullish hedge fund positions. Berkeley Lights, Inc. (NASDAQ:BLI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BLI is 21.4. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BLI as the stock returned 17% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.