Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of bluebird bio Inc (NASDAQ:BLUE).
Is bluebird bio Inc (NASDAQ:BLUE) the right pick for your portfolio? Hedge funds are taking a bearish view. The number of long hedge fund positions were cut by 6 in recent months. Our calculations also showed that BLUE isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_262340" align="aligncenter" width="399"] Arthur B Cohen and Joseph Healey of Healthcor Management LP[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a look at the latest hedge fund action regarding bluebird bio Inc (NASDAQ:BLUE).
Hedge fund activity in bluebird bio Inc (NASDAQ:BLUE)
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BLUE over the last 18 quarters. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of bluebird bio Inc (NASDAQ:BLUE), with a stake worth $60 million reported as of the end of September. Trailing Adage Capital Management was Casdin Capital, which amassed a stake valued at $50.8 million. Citadel Investment Group, Armistice Capital, and Healthcor Management LP 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 Casdin Capital allocated the biggest weight to bluebird bio Inc (NASDAQ:BLUE), around 5.39% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, setting aside 1.84 percent of its 13F equity portfolio to BLUE.
Due to the fact that bluebird bio Inc (NASDAQ:BLUE) has faced falling interest from hedge fund managers, logic holds that there was a specific group of funds who sold off their entire stakes heading into Q4. Intriguingly, Arsani William's Logos Capital cut the biggest position of the "upper crust" of funds tracked by Insider Monkey, valued at an estimated $17.9 million in stock. Kamran Moghtaderi's fund, Eversept Partners, also cut its stock, about $6.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 6 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to bluebird bio Inc (NASDAQ:BLUE). We will take a look at Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), Regal Beloit Corporation (NYSE:RBC), Freshpet Inc (NASDAQ:FRPT), and Taubman Centers, Inc. (NYSE:TCO). This group of stocks' market caps resemble BLUE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RARE,18,236444,0 RBC,19,204663,-5 FRPT,24,141032,4 TCO,38,478517,12 Average,24.75,265164,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $287 million in BLUE's case. Taubman Centers, Inc. (NYSE:TCO) is the most popular stock in this table. On the other hand Ultragenyx Pharmaceutical Inc (NASDAQ:RARE) is the least popular one with only 18 bullish hedge fund positions. bluebird bio Inc (NASDAQ:BLUE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on BLUE as the stock returned 38.4% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.