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Were Hedge Funds Right About Blackstone Mortgage Trust Inc (BXMT)?

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We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Blackstone Mortgage Trust Inc (NYSE:BXMT) based on that data.

Blackstone Mortgage Trust Inc (NYSE:BXMT) shareholders have witnessed a decrease in activity from the world's largest hedge funds lately. Blackstone Mortgage Trust Inc (NYSE:BXMT) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that BXMT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Armitage Egerton Capital
John Armitage Egerton Capital

John Armitage of Egerton Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's take a look at the key hedge fund action regarding Blackstone Mortgage Trust Inc (NYSE:BXMT).

Do Hedge Funds Think BXMT Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BXMT over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Armitage's Egerton Capital Limited has the largest position in Blackstone Mortgage Trust Inc (NYSE:BXMT), worth close to $115 million, comprising 0.6% of its total 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $35.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Israel Englander's Millennium Management, Lawrence Raiman's LDR Capital and Renaissance Technologies. In terms of the portfolio weights assigned to each position LDR Capital allocated the biggest weight to Blackstone Mortgage Trust Inc (NYSE:BXMT), around 10.22% of its 13F portfolio. Amitell Capital is also relatively very bullish on the stock, setting aside 1.6 percent of its 13F equity portfolio to BXMT.

Seeing as Blackstone Mortgage Trust Inc (NYSE:BXMT) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few hedge funds who sold off their entire stakes in the first quarter. It's worth mentioning that Franklin Parlamis's Aequim Alternative Investments dropped the biggest investment of all the hedgies monitored by Insider Monkey, totaling close to $1.5 million in stock, and Thomas Bailard's Bailard Inc was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the first quarter.

Let's now review hedge fund activity in other stocks similar to Blackstone Mortgage Trust Inc (NYSE:BXMT). We will take a look at National Fuel Gas Company (NYSE:NFG), Asana Inc. (NYSE:ASAN), ShockWave Medical, Inc. (NASDAQ:SWAV), Allison Transmission Holdings Inc (NYSE:ALSN), The Wendy's Company (NASDAQ:WEN), B2Gold Corp (NYSE:BTG), and Zhihu Inc. (NYSE:ZH). All of these stocks' market caps match BXMT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NFG,16,92712,3 ASAN,22,374549,4 SWAV,17,219798,-5 ALSN,30,498494,5 WEN,26,1018985,-5 BTG,18,313091,-4 ZH,23,94311,23 Average,21.7,373134,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $373 million. That figure was $210 million in BXMT's case. Allison Transmission Holdings Inc (NYSE:ALSN) is the most popular stock in this table. On the other hand National Fuel Gas Company (NYSE:NFG) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Blackstone Mortgage Trust Inc (NYSE:BXMT) is even less popular than NFG. Our overall hedge fund sentiment score for BXMT is 24. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards BXMT. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd but managed to beat the market again by 10.1 percentage points. Unfortunately BXMT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); BXMT investors were disappointed as the stock returned 3.7% since the end of the first quarter (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.