Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the fourth quarter, many investors lost money due to unpredictable events such as the sudden increase in long-term interest rates and unintended consequences of the trade war with China. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Blueprint Medicines Corporation (NASDAQ:BPMC) changed recently.
Blueprint Medicines Corporation (NASDAQ:BPMC) investors should pay attention to an increase in hedge fund sentiment recently. Our calculations also showed that BPMC isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a look at the latest hedge fund action surrounding Blueprint Medicines Corporation (NASDAQ:BPMC).
How are hedge funds trading Blueprint Medicines Corporation (NASDAQ:BPMC)?
Heading into the fourth quarter of 2018, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BPMC over the last 13 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Partner Fund Management was the largest shareholder of Blueprint Medicines Corporation (NASDAQ:BPMC), with a stake worth $112.4 million reported as of the end of September. Trailing Partner Fund Management was Hillhouse Capital Management, which amassed a stake valued at $111.7 million. Perceptive Advisors, Casdin Capital, and Biotechnology Value Fund / BVF Inc were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, some big names have jumped into Blueprint Medicines Corporation (NASDAQ:BPMC) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in Blueprint Medicines Corporation (NASDAQ:BPMC). Marshall Wace LLP had $11.6 million invested in the company at the end of the quarter. Andreas Halvorsen's Viking Global also made a $8.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Krishen Sud's Sivik Global Healthcare, Dmitry Balyasny's Balyasny Asset Management, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Blueprint Medicines Corporation (NASDAQ:BPMC) but similarly valued. These stocks are Eastgroup Properties Inc (NYSE:EGP), Signet Jewelers Limited (NYSE:SIG), Compañía de Minas Buenaventura S.A.A. (NYSE:BVN), and National Vision Holdings, Inc. (NASDAQ:EYE). This group of stocks' market caps are similar to BPMC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGP,5,17676,-3 SIG,26,383109,3 BVN,4,22280,-3 EYE,17,430467,6 Average,13,213383,0.75 [/table]
View table here if you experience formatting issues. As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $213.38 billion. That figure was $614 million in BPMC's case. Signet Jewelers Limited (NYSE:SIG) is the most popular stock in this table. On the other hand Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Blueprint Medicines Corporation (NASDAQ:BPMC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.