Hedge Funds Are Piling Into Lufax Holding Ltd (LU)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Lufax Holding Ltd (NYSE:LU) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Lufax Holding Ltd (NYSE:LU) has experienced an increase in enthusiasm from smart money in recent months. Lufax Holding Ltd (NYSE:LU) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 11. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 9 hedge funds in our database with LU holdings at the end of March. Our calculations also showed that LU isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Jeffrey Talpins of Element Capital

With all of this in mind we’re going to take a glance at the recent hedge fund action encompassing Lufax Holding Ltd (NYSE:LU).

Do Hedge Funds Think LU Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 111% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in LU a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Farallon Capital was the largest shareholder of Lufax Holding Ltd (NYSE:LU), with a stake worth $128 million reported as of the end of June. Trailing Farallon Capital was CaaS Capital, which amassed a stake valued at $95.4 million. Bridgewater Associates, Element Capital Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Element Capital Management allocated the biggest weight to Lufax Holding Ltd (NYSE:LU), around 3.1% of its 13F portfolio. CaaS Capital is also relatively very bullish on the stock, dishing out 1.61 percent of its 13F equity portfolio to LU.

As one would reasonably expect, specific money managers were breaking ground themselves. CaaS Capital, managed by Frank Fu, established the biggest position in Lufax Holding Ltd (NYSE:LU). CaaS Capital had $95.4 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also made a $19.6 million investment in the stock during the quarter. The other funds with brand new LU positions are Israel Englander’s Millennium Management, Renaissance Technologies, and Chris Rokos’s Rokos Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lufax Holding Ltd (NYSE:LU) but similarly valued. These stocks are Garmin Ltd. (NASDAQ:GRMN), Franco-Nevada Corporation (NYSE:FNV), Delta Air Lines, Inc. (NYSE:DAL), Arista Networks Inc (NYSE:ANET), Eversource Energy (NYSE:ES), Interactive Brokers Group, Inc. (NASDAQ:IBKR), and HubSpot Inc (NYSE:HUBS). This group of stocks’ market caps are similar to LU’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $1074 million. That figure was $358 million in LU’s case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Franco-Nevada Corporation (NYSE:FNV) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Lufax Holding Ltd (NYSE:LU) is even less popular than FNV. Our overall hedge fund sentiment score for LU is 40. 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. Hedge funds dodged a bullet by taking a bearish stance towards LU. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd but managed to beat the market again by 1.6 percentage points. Unfortunately LU wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); LU investors were disappointed as the stock returned -35.8% since the end of the second quarter (through 10/22) 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 since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.