Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Phoenix New Media Ltd (NYSE:FENG).
Hedge fund interest in Phoenix New Media Ltd (NYSE:FENG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that FENG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as VAALCO Energy, Inc. (NYSE:EGY), PC Tel Inc (NASDAQ:PCTI), and Cidara Therapeutics Inc (NASDAQ:CDTX) to gather more data points.
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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Paul Marshall of Marshall Wace
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. With all of this in mind let’s view the new hedge fund action regarding Phoenix New Media Ltd (NYSE:FENG).
Do Hedge Funds Think FENG Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FENG over the last 23 quarters. 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 Phoenix New Media Ltd (NYSE:FENG) was held by Renaissance Technologies, which reported holding $1.7 million worth of stock at the end of December. It was followed by Ariose Capital with a $0.7 million position. Other investors bullish on the company included Citadel Investment Group, Polar Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Ariose Capital allocated the biggest weight to Phoenix New Media Ltd (NYSE:FENG), around 4.85% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0021 percent of its 13F equity portfolio to FENG.
Due to the fact that Phoenix New Media Ltd (NYSE:FENG) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that slashed their full holdings last quarter. It’s worth mentioning that Charles de Vaulx’s International Value Advisers dumped the largest investment of all the hedgies followed by Insider Monkey, worth about $0.4 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Prelude Capital (previously Springbok Capital), also sold off its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Phoenix New Media Ltd (NYSE:FENG). We will take a look at VAALCO Energy, Inc. (NYSE:EGY), PC Tel Inc (NASDAQ:PCTI), Cidara Therapeutics Inc (NASDAQ:CDTX), S&W Seed Company (NASDAQ:SANW), Meten EdtechX Education Group Ltd. (NASDAQ:METX), Eyenovia, Inc. (NASDAQ:EYEN), and Inmune Bio Inc. (NASDAQ:INMB). All of these stocks’ market caps match FENG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EGY | 6 | 11733 | -1 |
| PCTI | 10 | 27772 | 0 |
| CDTX | 6 | 13667 | 0 |
| SANW | 7 | 78119 | 1 |
| METX | 2 | 772 | -1 |
| EYEN | 6 | 3811 | 2 |
| INMB | 3 | 3477 | 1 |
| Average | 5.7 | 19907 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $3 million in FENG’s case. PC Tel Inc (NASDAQ:PCTI) is the most popular stock in this table. On the other hand Meten EdtechX Education Group Ltd. (NASDAQ:METX) is the least popular one with only 2 bullish hedge fund positions. Phoenix New Media Ltd (NYSE:FENG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FENG is 37.4. 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately FENG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FENG investors were disappointed as the stock returned -10.2% since the end of March (through 6/18) 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.
Follow Phoenix New Media Ltd (NYSE:FENG)
Follow Phoenix New Media Ltd (NYSE:FENG)
Disclosure: None. This article was originally published at Insider Monkey.
