Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Bilibili Inc. (NASDAQ:BILI) to find out whether there were any major changes in hedge funds’ views.
Is Bilibili Inc. (NASDAQ:BILI) a buy right now? The smart money was selling. The number of bullish hedge fund positions fell by 12 lately. Bilibili Inc. (NASDAQ:BILI) was in 35 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 53. Our calculations also showed that BILI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind let’s go over the latest hedge fund action surrounding Bilibili Inc. (NASDAQ:BILI).
Do Hedge Funds Think BILI Is A Good Stock To Buy Now?
At third quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards BILI over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Lone Pine Capital, holds the largest position in Bilibili Inc. (NASDAQ:BILI). Lone Pine Capital has a $569.9 million position in the stock, comprising 1.9% of its 13F portfolio. On Lone Pine Capital’s heels is Yiheng Capital, led by Jonathan Guo, holding a $321.4 million position; the fund has 15.8% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise Ken Fisher’s Fisher Asset Management, and Josh Resnick’s Jericho Capital Asset Management. In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Bilibili Inc. (NASDAQ:BILI), around 15.82% of its 13F portfolio. Kylin Management is also relatively very bullish on the stock, dishing out 15.39 percent of its 13F equity portfolio to BILI.
Because Bilibili Inc. (NASDAQ:BILI) has witnessed a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers that slashed their entire stakes in the third quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dropped the largest investment of all the hedgies monitored by Insider Monkey, valued at an estimated $297.8 million in stock. Richard Driehaus’s fund, Driehaus Capital, also cut its stock, about $66.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 12 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Bilibili Inc. (NASDAQ:BILI). These stocks are Fortive Corporation (NYSE:FTV), Realty Income Corporation (NYSE:O), Coca-Cola European Partners plc (NYSE:CCEP), PT Telekomunikasi Indonesia (NYSE:TLK), Toast Inc. (NYSE:TOST), CDW Corporation (NASDAQ:CDW), and Avantor, Inc. (NYSE:AVTR). This group of stocks’ market valuations are closest to BILI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FTV | 32 | 2130115 | 1 |
| O | 22 | 275031 | -1 |
| CCEP | 32 | 1192664 | 1 |
| TLK | 4 | 170252 | -1 |
| TOST | 38 | 567350 | 38 |
| CDW | 37 | 1906004 | 10 |
| AVTR | 53 | 2439815 | 9 |
| Average | 31.1 | 1240176 | 8.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1240 million. That figure was $1510 million in BILI’s case. Avantor, Inc. (NYSE:AVTR) is the most popular stock in this table. On the other hand PT Telekomunikasi Indonesia (NYSE:TLK) is the least popular one with only 4 bullish hedge fund positions. Bilibili Inc. (NASDAQ:BILI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BILI is 44.4. 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 positive signal but 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately BILI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BILI were disappointed as the stock returned -0.2% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
