Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Tuniu Corp (NASDAQ:TOUR).
Tuniu Corp (NASDAQ:TOUR) has experienced an increase in activity from the world’s largest hedge funds lately. There were 4 hedge funds in our database with TOUR holdings at the end of the previous quarter. At the end of this article we will also compare TOUR to other stocks including Siliconware Precision Industries (ADR) (NASDAQ:SPIL), Avid Technology, Inc. (NASDAQ:AVID), and Primo Water Corporation (NASDAQ:PRMW) to get a better sense of its popularity.
Follow Tuniu Corp (NASDAQ:TOUR)
Follow Tuniu Corp (NASDAQ:TOUR)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s go over the fresh action encompassing Tuniu Corp (NASDAQ:TOUR).
What does the smart money think about Tuniu Corp (NASDAQ:TOUR)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a boost of 75% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards TOUR over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Serenity Capital, led by Wang Chen, holds the biggest position in Tuniu Corp (NASDAQ:TOUR). According to regulatory filings, the fund has an $11.6 million position in the stock, comprising 3.8% of its 13F portfolio. The second largest stake is held by Wexford Capital, led by Charles Davidson, which manages a $0.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism consist of Matthew Hulsizer’s PEAK6 Capital Management, Millennium Management, one of the biggest hedge funds in the world, and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, some big names have been driving this bullishness. Charles Davidson’s Wexford Capital established the biggest position in Tuniu Corp (NASDAQ:TOUR). Matthew Hulsizer’s PEAK6 Capital Management also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw and Larry Chen and Terry Zhang’s Tairen Capital.
Let’s also examine hedge fund activity in other stocks similar to Tuniu Corp (NASDAQ:TOUR). We will take a look at Siliconware Precision Industries (ADR) (NASDAQ:SPIL), Avid Technology, Inc. (NASDAQ:AVID), Primo Water Corporation (NASDAQ:PRMW), and Natural Gas Services Group, Inc. (NYSE:NGS). This group of stocks’ market caps are similar to TOUR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPIL | 6 | 16403 | 1 |
| AVID | 17 | 93598 | 7 |
| PRMW | 17 | 73107 | 0 |
| NGS | 9 | 25344 | -1 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $13 million in TOUR’s case. Avid Technology, Inc. (NASDAQ:AVID) is the most popular stock in this table. On the other hand Siliconware Precision Industries (ADR) (NASDAQ:SPIL) is the least popular one with only 6 bullish hedge fund positions. Tuniu Corp (NASDAQ:TOUR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AVID might be a better candidate to consider taking a long position in.
Disclosure: none.
