The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards BlackLine, Inc. (NASDAQ:BL).
Is BlackLine, Inc. (NASDAQ:BL) a great stock to buy now? Investors who are in the know are selling. The number of long hedge fund positions dropped by 5 lately. Our calculations also showed that BL isn't among the 30 most popular stocks among hedge funds (view video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the latest hedge fund action surrounding BlackLine, Inc. (NASDAQ:BL).
How are hedge funds trading BlackLine, Inc. (NASDAQ:BL)?
At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BL over the last 16 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of BlackLine, Inc. (NASDAQ:BL), with a stake worth $47.1 million reported as of the end of March. Trailing D E Shaw was Tremblant Capital, which amassed a stake valued at $11.5 million. Arrowstreet Capital, Millennium Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that BlackLine, Inc. (NASDAQ:BL) has faced declining sentiment from the smart money, we can see that there lies a certain "tier" of fund managers that elected to cut their entire stakes last quarter. It's worth mentioning that Jonathan Auerbach's Hound Partners sold off the biggest position of the "upper crust" of funds tracked by Insider Monkey, worth close to $3.7 million in stock, and Simon Sadler's Segantii Capital was right behind this move, as the fund dropped about $3.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.
Let's check out hedge fund activity in other stocks similar to BlackLine, Inc. (NASDAQ:BL). We will take a look at MakeMyTrip Limited (NASDAQ:MMYT), Iridium Communications Inc. (NASDAQ:IRDM), Albany International Corp. (NYSE:AIN), and Noah Holdings Limited (NYSE:NOAH). This group of stocks' market valuations are closest to BL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MMYT,11,61298,-1 IRDM,12,114056,0 AIN,15,82406,-1 NOAH,12,218313,-2 Average,12.5,119018,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $95 million in BL's case. Albany International Corp. (NYSE:AIN) is the most popular stock in this table. On the other hand MakeMyTrip Limited (NASDAQ:MMYT) is the least popular one with only 11 bullish hedge fund positions. BlackLine, Inc. (NASDAQ:BL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BL were disappointed as the stock returned -10.7% during the third 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.