Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
SINA Corp (NASDAQ:SINA) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the third quarter of 2019. 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 CONMED Corporation (NASDAQ:CNMD), Herman Miller, Inc. (NASDAQ:MLHR), and EQT Corporation (NYSE:EQT) to gather more data points. Our calculations also showed that SINA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the new hedge fund action regarding SINA Corp (NASDAQ:SINA).
Hedge fund activity in SINA Corp (NASDAQ:SINA)
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SINA over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David Costen Haley’s HBK Investments has the most valuable position in SINA Corp (NASDAQ:SINA), worth close to $63.8 million, comprising 1.3% of its total 13F portfolio. Coming in second is David E. Shaw of D E Shaw, with a $53 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish comprise Kerr Neilson’s Platinum Asset Management, Charles de Vaulx’s International Value Advisers and Larry Chen and Terry Zhang’s Tairen Capital. In terms of the portfolio weights assigned to each position Ariose Capital allocated the biggest weight to SINA Corp (NASDAQ:SINA), around 17.19% of its 13F portfolio. Tairen Capital is also relatively very bullish on the stock, earmarking 2.3 percent of its 13F equity portfolio to SINA.
Seeing as SINA Corp (NASDAQ:SINA) has witnessed declining sentiment from hedge fund managers, we can see that there were a few fund managers who sold off their entire stakes in the third quarter. Interestingly, Farallon Capital dropped the biggest investment of the 750 funds tracked by Insider Monkey, worth about $22 million in stock. Lee Ainslie’s fund, Maverick Capital, also cut its stock, about $4.3 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to SINA Corp (NASDAQ:SINA). These stocks are CONMED Corporation (NASDAQ:CNMD), Herman Miller, Inc. (NASDAQ:MLHR), EQT Corporation (NYSE:EQT), and Gol Linhas Aereas Inteligentes SA (NYSE:GOL). All of these stocks’ market caps are closest to SINA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNMD | 22 | 201980 | 3 |
| MLHR | 26 | 209936 | 1 |
| EQT | 35 | 442221 | 0 |
| GOL | 11 | 194286 | 3 |
| Average | 23.5 | 262106 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $262 million. That figure was $257 million in SINA’s case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is the least popular one with only 11 bullish hedge fund positions. SINA Corp (NASDAQ:SINA) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SINA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SINA investors were disappointed as the stock returned -11% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
