Chindata Group Holdings Limited (CD): Hedge Funds Are Nibbling

With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Chindata Group Holdings Limited (NASDAQ:CD).

Chindata Group Holdings Limited (NASDAQ:CD) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 23. CD has experienced an increase in hedge fund interest in recent months. There were 9 hedge funds in our database with CD holdings at the end of March. Our calculations also showed that CD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Stuart Zimmer of Zimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. Now we’re going to take a gander at the recent hedge fund action surrounding Chindata Group Holdings Limited (NASDAQ:CD).

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

Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in CD over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Sylebra Capital Management held the most valuable stake in Chindata Group Holdings Limited (NASDAQ:CD), which was worth $61.6 million at the end of the second quarter. On the second spot was Tiger Global Management LLC which amassed $27.9 million worth of shares. Marshall Wace LLP, Zimmer Partners, and Bridgewater Associates 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 Sylebra Capital Management allocated the biggest weight to Chindata Group Holdings Limited (NASDAQ:CD), around 1.53% of its 13F portfolio. Infini Capital is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to CD.

As industrywide interest jumped, specific money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Chindata Group Holdings Limited (NASDAQ:CD). Marshall Wace LLP had $11.7 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $1.2 million investment in the stock during the quarter. The other funds with brand new CD positions are Israel Englander’s Millennium Management, Tony Chin’s Infini Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Chindata Group Holdings Limited (NASDAQ:CD) but similarly valued. These stocks are Spirit Realty Capital Inc (NYSE:SRC), Vontier Corporation (NYSE:VNT), Helen of Troy Limited (NASDAQ:HELE), Surgery Partners, Inc. (NASDAQ:SGRY), Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), TG Therapeutics Inc (NASDAQ:TGTX), and ImmunityBio, Inc. (NASDAQ:IBRX). All of these stocks’ market caps resemble CD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $304 million. That figure was $116 million in CD’s case. Vontier Corporation (NYSE:VNT) is the most popular stock in this table. On the other hand ImmunityBio, Inc. (NASDAQ:IBRX) is the least popular one with only 7 bullish hedge fund positions. Chindata Group Holdings Limited (NASDAQ:CD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CD is 24.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately CD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CD investors were disappointed as the stock returned -44.7% since the end of June (through 9/27) 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 in 2021.

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