How do you choose the next stock to invest in? One way would be to spend days researching through thousands of publicly traded companies. However, an easier way is to look at stocks that smart investors are collectively bullish on. Hedge funds and other institutional investors typically invest large amounts of capital and should exercise due diligence when choosing their next choice. They don’t always make the right choices, but, on average, their stock choices have historically generated strong returns after adjusting for known risk factors. With that in mind, let’s take a look at the recent hedge fund activity surrounding Butterfly Network, Inc. (NYSE: BFLY).

Butterfly Network, Inc. (NYSE: BFLY) was listed in 24 hedge fund portfolios at the end of the second quarter of 2021. The all-time high for this statistic is 32. BFLY investors should be aware of the declining enthusiasm of smart money. These last months. There were 32 hedge funds in our database with BFLY positions at the end of the first quarter. Our calculations also showed that BFLY is not among the top 30 most popular stocks among hedge funds (click for Q2 rank).

In today’s market, there are dozens of gauges that shareholders have at their disposal to rate publicly traded companies. Two of the least used indicators are hedge funds and insider trading. We have shown that historically those who follow the best picks of the best hedge fund managers can outperform larger indices by a superb margin (see details here). Additionally, our monthly newsletter’s long stock picks portfolio has returned 185.4% since March 2017 (through August 2021) and has beaten the S&P 500 Index by over 79 percentage points. You can download a sample issue of this newsletter from our website.

Andy Redleaf Andrew Redleaf Whitebox Advisors

Andy Redleaf of Whitebox Advisors

At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the top 10 electric vehicle stocks to pick the next Tesla that will deliver 10x yield. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. With all of that in mind, we’ll see recent hedge fund action regarding Butterfly Network, Inc. (NYSE: BFLY).

Do hedge funds think BFLY is a good stock to buy now?

At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long on this stock, a change of -25% from the previous quarter. On the other hand, there was a total of 0 hedge funds with a bullish position on BFLY a year ago. With the whirlwind of hedge fund sentiment, there is a select group of outstanding hedge fund managers who were drastically increasing their stakes (or already racking up large positions).

Of these funds, ARK Investment Management held the largest stake in Butterfly Network, Inc. (NYSE: BFLY), which stood at $ 114.8 million at the end of the second quarter. In second place was Glenview Capital which raised $ 71.9 million in shares. Partner Fund Management, Honeycomb Asset Management and Ionic Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders in the company. In terms of the portfolio weights assigned to each position, Glenview Capital assigned the largest weight to Butterfly Network, Inc. (NYSE: BFLY), approximately 1.21% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, setting aside 1.15% of its 13F equity portfolio at BFLY.

Given that Butterfly Network, Inc. (NYSE: BFLY) has seen a drop in interest from all of the hedge funds we track, it’s safe to say there was a specific group of hedges that decided to sell all of their holdings in the last quarter. Oddly enough, Israel Englander’s Millennium Management sold most of the “top crust” of funds monitored by Insider Monkey, worth around $ 14.7 million in stocks. Efrem Kamen’s fund, Pura Vida Investments, also bid farewell to its stock, valued at around $ 3.4 million. These moves are important to note, as total hedge fund interest fell by 8 funds in the last quarter.

Now let’s review hedge fund activity in other stocks – not necessarily in the same industry as Butterfly Network, Inc. (NYSE: BFLY) but of similar value. We’ll be looking at Columbia Banking System Inc (NASDAQ: COLB), Domtar Corporation (NYSE: UFS), SPX Corporation (NYSE: SPXC), Vivint Smart Home, Inc. (NYSE: VVNT), SPX FLOW, Inc. (NYSE: FLOW) , Axos Financial, Inc. (NYSE: AX) and Criteo SA (NASDAQ: CRTO). The market valuations of this group of stocks resemble the market valuation of BFLY.

[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF position COLB, 12.153804, -2 UFS, 29.367864.2 SPXC, 11.35832.0 VVNT, 5.32700, – 2 FLUX, 14.198812, -2 AX, 11.34859, -2 CRTO, 16.188013.0 Average, 14.144555, -0.9 [/table]

Check the table here if you have formatting issues.

As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $ 145 million. That figure was $ 263 million in the case of BFLY. Domtar Corporation (NYSE: UFS) is the most popular share in this table. On the other hand, Vivint Smart Home, Inc. (NYSE: VVNT) is the least popular with only 5 bullish hedge fund positions. Butterfly Network, Inc. (NYSE: BFLY) isn’t the most popular stock in this group, but hedge fund interest is still above average. Our overall hedge fund sentiment score for BFLY is 59.1. Stocks with a higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal, but we prefer to spend our time researching the stocks on which hedge funds are accumulating. Our calculations showed that the 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020 and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22 and again beat the market by 1.6 percentage points. Unfortunately, BFLY was not as popular as these 5 stocks and the hedge funds that bet on BFLY were disappointed as the stock has returned -28.5% since the end of June (through 10/22) and has under- performed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the 5 most popular stocks among hedge funds, as many of these stocks have already outperformed the market since 2019.

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Disclosure: none. This article originally appeared on Insider Monkey.


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