We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Blueprint Medicines Corporation (NASDAQ:BPMC). At the end of this article we will compare BPMC against similarly valued peers such as GSX Techedu Inc. (NYSE:GSX), Sibanye Gold Limited (NYSE:SBGL), ANGI Homeservices Inc. (NASDAQ:ANGI), and Murphy Oil Corporation (NYSE:MUR).
Blueprint Medicines Corporation (NASDAQ:BPMC) investors should pay attention to a decrease in support from the world's most elite money managers in recent months. BPMC was in 26 hedge funds' portfolios at the end of September. There were 27 hedge funds in our database with BPMC positions at the end of the previous quarter. Our calculations also showed that BPMC 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26082" align="aligncenter" width="466"] Andreas Halvorsen of Viking Global[/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. Let's take a peek at the latest hedge fund action surrounding Blueprint Medicines Corporation (NASDAQ:BPMC).
Hedge fund activity in Blueprint Medicines Corporation (NASDAQ:BPMC)
Heading into the fourth quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BPMC over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Hillhouse Capital Management held the most valuable stake in Blueprint Medicines Corporation (NASDAQ:BPMC), which was worth $110.1 million at the end of the third quarter. On the second spot was Cadian Capital which amassed $104.2 million worth of shares. Casdin Capital, Perceptive Advisors, and Viking Global 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 Foresite Capital allocated the biggest weight to Blueprint Medicines Corporation (NASDAQ:BPMC), around 15.69% of its portfolio. Casdin Capital is also relatively very bullish on the stock, setting aside 6.91 percent of its 13F equity portfolio to BPMC.
Seeing as Blueprint Medicines Corporation (NASDAQ:BPMC) has faced a decline in interest from hedge fund managers, we can see that there exists a select few hedgies that elected to cut their positions entirely last quarter. Interestingly, Jerome Pfund and Michael Sjostrom's Sectoral Asset Management dropped the largest stake of all the hedgies monitored by Insider Monkey, totaling close to $1 million in stock, and Joel Greenblatt's Gotham Asset Management was right behind this move, as the fund said goodbye to about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Blueprint Medicines Corporation (NASDAQ:BPMC) but similarly valued. We will take a look at GSX Techedu Inc. (NYSE:GSX), Sibanye Gold Limited (NYSE:SBGL), ANGI Homeservices Inc. (NASDAQ:ANGI), and Murphy Oil Corporation (NYSE:MUR). All of these stocks' market caps match BPMC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSX,3,6778,1 SBGL,14,135328,5 ANGI,21,261024,1 MUR,17,143553,-1 Average,13.75,136671,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $708 million in BPMC's case. ANGI Homeservices Inc. (NASDAQ:ANGI) is the most popular stock in this table. On the other hand GSX Techedu Inc. (NYSE:GSX) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Blueprint Medicines Corporation (NASDAQ:BPMC) 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 BPMC as the stock returned 11.7% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.