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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Noah Holdings Limited (NYSE:NOAH)?
Is Noah Holdings Limited (NYSE:NOAH) going to take off soon? Investors who are in the know are selling. The number of bullish hedge fund bets were trimmed by 1 in recent months. Our calculations also showed that NOAH 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). NOAH was in 14 hedge funds’ portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with NOAH holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open today, Our experts hone in on the crème de la crème of this club, about 850 funds. These hedge fund managers administer the lion’s share of the smart money’s total asset base, and by keeping an eye on their top stock picks, Insider Monkey has uncovered a few investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Ric Dillon of Diamond Hill Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 largest producers of bauxite to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let’s take a look at the fresh hedge fund action encompassing Noah Holdings Limited (NYSE:NOAH).
How have hedgies been trading Noah Holdings Limited (NYSE:NOAH)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the fourth quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in NOAH a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Yiheng Capital held the most valuable stake in Noah Holdings Limited (NYSE:NOAH), which was worth $150.6 million at the end of the third quarter. On the second spot was Tiger Pacific Capital which amassed $68.4 million worth of shares. Platinum Asset Management, Kylin Management, and Old Well Partners 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 Tiger Pacific Capital allocated the biggest weight to Noah Holdings Limited (NYSE:NOAH), around 21.49% of its 13F portfolio. Kylin Management is also relatively very bullish on the stock, designating 14.13 percent of its 13F equity portfolio to NOAH.
Because Noah Holdings Limited (NYSE:NOAH) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedgies that slashed their entire stakes last quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, comprising about $2.2 million in stock. Phil Frohlich’s fund, Prescott Group Capital Management, also dumped its stock, about $1.5 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Noah Holdings Limited (NYSE:NOAH). These stocks are Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), Focus Financial Partners Inc. (NASDAQ:FOCS), WestAmerica Bancorp. (NASDAQ:WABC), and Studio City International Holdings Limited (NYSE:MSC). This group of stocks’ market values are similar to NOAH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IRWD | 28 | 334818 | 0 |
| FOCS | 7 | 34941 | -5 |
| WABC | 8 | 8181 | -3 |
| MSC | 3 | 244275 | -1 |
| Average | 11.5 | 155554 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $321 million in NOAH’s case. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 3 bullish hedge fund positions. Noah Holdings Limited (NYSE:NOAH) 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately NOAH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NOAH were disappointed as the stock returned 1.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
