Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Zhaopin Ltd (ADR) (NYSE:ZPIN) was in 6 hedge funds’ portfolios at the end of September. Zhaopin Ltd (ADR) (NYSE:ZPIN) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 11 hedge funds in our database with Zhaopin Ltd (ADR) (NYSE:ZPIN) holdings at the end of the previous quarter. 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 CorVel Corporation (NASDAQ:CRVL), Interactive Intelligence Group Inc (NASDAQ:ININ), and Sandy Spring Bancorp Inc. (NASDAQ:SASR) to gather more data points.
In today’s marketplace, there are a large number of gauges investors use to grade publicly traded companies. A couple of the less utilized gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a very impressive margin (see the details here).
Keeping this in mind, we’re going to take a peek at the fresh action encompassing Zhaopin Ltd (ADR) (NYSE:ZPIN).
How are hedge funds trading Zhaopin Ltd (ADR) (NYSE:ZPIN)?
Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a decrease of 45% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the number one position in Zhaopin Ltd (ADR) (NYSE:ZPIN), worth close to $1.8 million, amounting to less than 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw which holds a $1.2 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions encompass Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Chao Ku’s Nine Chapters Capital Management.
Due to the fact that Zhaopin Ltd (ADR) (NYSE:ZPIN) has faced a bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of fund managers that decided to sell off their positions entirely last quarter. At the top of the heap, Jeffrey Altman’s Owl Creek Asset Management cut the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $5.6 million in stock, and Eric Semler’s TCS Capital Management was right behind this move, as the fund dropped about $2.6 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Zhaopin Ltd (ADR) (NYSE:ZPIN) but similarly valued. We will take a look at CorVel Corporation (NASDAQ:CRVL), Interactive Intelligence Group Inc (NASDAQ:ININ), Sandy Spring Bancorp Inc. (NASDAQ:SASR), and Premiere Global Services, Inc. (NYSE:PGI). This group of stocks’ market valuations is similar to Zhaopin Ltd (ADR) (NYSE:ZPIN)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRVL | 10 | 52208 | -1 |
| ININ | 9 | 122242 | -1 |
| SASR | 4 | 52909 | 0 |
| PGI | 16 | 72381 | 2 |
As you can see, these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $5 million in Zhaopin Ltd (ADR) (NYSE:ZPIN)’s case. Premiere Global Services, Inc. (NYSE:PGI) is the most popular stock in this table. On the other hand, Sandy Spring Bancorp Inc. (NASDAQ:SASR) is the least popular one with only 4 bullish hedge fund positions. Zhaopin Ltd (ADR) (NYSE:ZPIN) 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, Premiere Global Services, Inc. (NYSE:PGI) might be a better candidate to consider a long position.
