Does Changyou.Com Ltd (NASDAQ:CYOU) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Changyou.Com Ltd (NASDAQ:CYOU) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that CYOU 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.
In the eyes of most stock holders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are over 8000 funds in operation at the moment, We choose to focus on the crème de la crème of this club, about 750 funds. It is estimated that this group of investors handle the majority of the smart money’s total capital, and by keeping an eye on their finest picks, Insider Monkey has found several investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the new hedge fund action surrounding Changyou.Com Ltd (NASDAQ:CYOU).
How have hedgies been trading Changyou.Com Ltd (NASDAQ:CYOU)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in CYOU a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Changyou.Com Ltd (NASDAQ:CYOU) was held by Maso Capital, which reported holding $15.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $11.7 million position. Other investors bullish on the company included GLG Partners, Citadel Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Maso Capital allocated the biggest weight to Changyou.Com Ltd (NASDAQ:CYOU), around 5.53% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to CYOU.
Consequently, key money managers have jumped into Changyou.Com Ltd (NASDAQ:CYOU) headfirst. GLG Partners, managed by Noam Gottesman, assembled the largest position in Changyou.Com Ltd (NASDAQ:CYOU). GLG Partners had $2.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also initiated a $0.6 million position during the quarter. The following funds were also among the new CYOU investors: Warren Lammert’s Granite Point Capital, Donald Sussman’s Paloma Partners, and Minhua Zhang’s Weld Capital Management.
Let’s go over hedge fund activity in other stocks similar to Changyou.Com Ltd (NASDAQ:CYOU). These stocks are Gores Metropoulos, Inc. (NASDAQ:GMHI), Blue Bird Corporation (NASDAQ:BLBD), Sunlands Online Education Group (NYSE:STG), and Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN). All of these stocks’ market caps are closest to CYOU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GMHI | 19 | 163294 | -1 |
| BLBD | 7 | 57343 | 2 |
| STG | 1 | 885 | 0 |
| ACHN | 18 | 82556 | 4 |
| Average | 11.25 | 76020 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $38 million in CYOU’s case. Gores Metropoulos, Inc. (NASDAQ:GMHI) is the most popular stock in this table. On the other hand Sunlands Online Education Group (NYSE:STG) is the least popular one with only 1 bullish hedge fund positions. Changyou.Com Ltd (NASDAQ:CYOU) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CYOU wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CYOU were disappointed as the stock returned 0.5% during the fourth quarter (through the end of November) 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.
