Did Hedge Funds Make The Right Call On Yandex NV (YNDX)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Yandex NV (NASDAQ:YNDX) and determine whether the smart money was really smart about this stock.

Yandex NV (NASDAQ:YNDX) was in 35 hedge funds’ portfolios at the end of the first quarter of 2020. YNDX investors should pay attention to a decrease in support from the world’s most elite money managers lately. There were 38 hedge funds in our database with YNDX holdings at the end of the previous quarter. Our calculations also showed that YNDX 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.

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. 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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Alec Litowitz of Magnetar Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the key hedge fund action regarding Yandex NV (NASDAQ:YNDX).

How are hedge funds trading Yandex NV (NASDAQ:YNDX)?

At Q1’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in YNDX over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Egerton Capital Limited, managed by John Armitage, holds the most valuable position in Yandex NV (NASDAQ:YNDX). Egerton Capital Limited has a $239.4 million position in the stock, comprising 2.5% of its 13F portfolio. On Egerton Capital Limited’s heels is GQG Partners, managed by Rajiv Jain, which holds a $120.1 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Fisher’s Fisher Asset Management and Nitin Saigal and Dan Jacobs’s Kora Management. In terms of the portfolio weights assigned to each position Kora Management allocated the biggest weight to Yandex NV (NASDAQ:YNDX), around 10.99% of its 13F portfolio. Prince Street Capital Management is also relatively very bullish on the stock, designating 8.01 percent of its 13F equity portfolio to YNDX.

Seeing as Yandex NV (NASDAQ:YNDX) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few funds who sold off their positions entirely by the end of the first quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors dropped the largest investment of all the hedgies tracked by Insider Monkey, worth close to $82.1 million in stock. Scott Ferguson’s fund, Sachem Head Capital, also cut its stock, about $73.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Yandex NV (NASDAQ:YNDX) but similarly valued. We will take a look at NortonLifeLock Inc. (NASDAQ:NLOK), Expeditors International of Washington, Inc. (NASDAQ:EXPD), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), and Shinhan Financial Group Co., Ltd. (NYSE:SHG). This group of stocks’ market valuations match YNDX’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $860 million. That figure was $770 million in YNDX’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 5 bullish hedge fund positions. Yandex NV (NASDAQ:YNDX) 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on YNDX as the stock returned 46.9% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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