Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
BlackBerry Limited (NYSE:BB) investors should pay attention to an increase in activity from the world's largest hedge funds recently. BB was in 28 hedge funds' portfolios at the end of September. There were 25 hedge funds in our database with BB positions at the end of the previous quarter. Our calculations also showed that BB 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.
At the moment there are many indicators stock market investors have at their disposal to grade their stock investments. A pair of the most useful indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outperform the market by a superb amount (see the details here).
[caption id="attachment_255018" align="aligncenter" width="600"] Prem Watsa of Fairfax Financial Holdings[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the fresh hedge fund action surrounding BlackBerry Limited (NYSE:BB).
What does smart money think about BlackBerry Limited (NYSE:BB)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the second quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in BB 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.
The largest stake in BlackBerry Limited (NYSE:BB) was held by Fairfax Financial Holdings, which reported holding $244.8 million worth of stock at the end of September. It was followed by Iridian Asset Management with a $52.5 million position. Other investors bullish on the company included Kahn Brothers, D E Shaw, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Fairfax Financial Holdings allocated the biggest weight to BlackBerry Limited (NYSE:BB), around 11.3% of its portfolio. Kahn Brothers is also relatively very bullish on the stock, designating 3.73 percent of its 13F equity portfolio to BB.
Now, some big names were leading the bulls' herd. Clearline Capital, managed by Marc Majzner, created the biggest position in BlackBerry Limited (NYSE:BB). Clearline Capital had $2.1 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new BB investors: John Thiessen's Vertex One Asset Management, Charles Davidson and Joseph Jacobs's Wexford Capital, and Israel Englander's Millennium Management.
Let's now take a look at hedge fund activity in other stocks similar to BlackBerry Limited (NYSE:BB). These stocks are Novanta Inc. (NASDAQ:NOVT), Colliers International Group Inc (NASDAQ:CIGI), Rexnord Corp (NYSE:RXN), and Verint Systems Inc. (NASDAQ:VRNT). This group of stocks' market values match BB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NOVT,9,46032,-4 CIGI,11,714194,1 RXN,19,213644,-1 VRNT,21,268774,-2 Average,15,310661,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $311 million. That figure was $402 million in BB's case. Verint Systems Inc. (NASDAQ:VRNT) is the most popular stock in this table. On the other hand Novanta Inc. (NASDAQ:NOVT) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks BlackBerry Limited (NYSE:BB) is more popular among hedge funds. 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. Hedge funds were also right about betting on BB, though not to the same extent, as the stock returned 6.1% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.