At Insider Monkey we follow around 700 of the best-performing investors and even though many of them lost money in the last couple of months (70% of hedge funds lost money in October whereas S&P 500 ETF lost about 7%), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Is SINA Corp (NASDAQ:SINA) a buy, sell, or hold? Hedge funds are selling. The number of bullish hedge fund positions dropped by 4 in recent months. Our calculations also showed that SINA isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to review the latest hedge fund action surrounding SINA Corp (NASDAQ:SINA).
Hedge fund activity in SINA Corp (NASDAQ:SINA)
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2018. On the other hand, there were a total of 34 hedge funds with a bullish position in SINA at the beginning of this year. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Platinum Asset Management held the most valuable stake in SINA Corp (NASDAQ:SINA), which was worth $240.7 million at the end of the third quarter. On the second spot was HBK Investments which amassed $95.9 million worth of shares. Moreover, Tairen Capital, Farallon Capital, and D E Shaw were also bullish on SINA Corp (NASDAQ:SINA), allocating a large percentage of their portfolios to this stock.
Due to the fact that SINA Corp (NASDAQ:SINA) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers that slashed their entire stakes by the end of the third quarter. At the top of the heap, Glenn Russell Dubin’s Highbridge Capital Management cut the biggest investment of the 700 funds tracked by Insider Monkey, totaling about $11 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dumped about $6 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to SINA Corp (NASDAQ:SINA). We will take a look at Enbridge Energy Partners, L.P. (NYSE:EEP), Littelfuse, Inc. (NASDAQ:LFUS), Sterling Bancorp (NYSE:STL), and Texas Roadhouse Inc (NASDAQ:TXRH). This group of stocks’ market caps match SINA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EEP | 3 | 7459 | 0 |
| LFUS | 22 | 258266 | 2 |
| STL | 21 | 396932 | 1 |
| TXRH | 19 | 77259 | 3 |
| Average | 16.25 | 184979 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $770 million in SINA’s case. Littelfuse, Inc. (NASDAQ:LFUS) is the most popular stock in this table. On the other hand Enbridge Energy Partners, L.P. (NYSE:EEP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks SINA Corp (NASDAQ:SINA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
