After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards KE Holdings Inc (NYSE:BEKE).
KE Holdings Inc (NYSE:BEKE) has experienced a decrease in hedge fund sentiment of late. KE Holdings Inc (NYSE:BEKE) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistic is 33. Our calculations also showed that BEKE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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’ 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 79 percentage points since March 2017 (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.
Alex Sacerdote of Whale Rock Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s check out the key hedge fund action regarding KE Holdings Inc (NYSE:BEKE).
Do Hedge Funds Think BEKE Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in BEKE a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Lone Pine Capital, holds the most valuable position in KE Holdings Inc (NYSE:BEKE). Lone Pine Capital has a $623.1 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Eashwar Krishnan of Tybourne Capital Management, with a $440.3 million position; the fund has 9.3% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Alex Sacerdote’s Whale Rock Capital Management, Catherine D. Wood’s ARK Investment Management and Lei Zhang’s Hillhouse Capital Management. In terms of the portfolio weights assigned to each position Kylin Management allocated the biggest weight to KE Holdings Inc (NYSE:BEKE), around 15.78% of its 13F portfolio. Tybourne Capital Management is also relatively very bullish on the stock, dishing out 9.27 percent of its 13F equity portfolio to BEKE.
Since KE Holdings Inc (NYSE:BEKE) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few funds that slashed their positions entirely heading into Q3. At the top of the heap, Karthik Sarma’s SRS Investment Management sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, worth close to $28.5 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also dropped its stock, about $4.5 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as KE Holdings Inc (NYSE:BEKE) but similarly valued. We will take a look at CrowdStrike Holdings, Inc. (NASDAQ:CRWD), NXP Semiconductors NV (NASDAQ:NXPI), Honda Motor Co Ltd (NYSE:HMC), Global Payments Inc (NYSE:GPN), Twitter Inc (NYSE:TWTR), Banco Bradesco SA (NYSE:BBD), and DocuSign, Inc. (NASDAQ:DOCU). This group of stocks’ market caps resemble BEKE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRWD | 66 | 7266652 | -11 |
| NXPI | 52 | 1336949 | -1 |
| HMC | 10 | 374945 | -2 |
| GPN | 66 | 4858185 | 4 |
| TWTR | 89 | 6031488 | -18 |
| BBD | 18 | 362308 | -1 |
| DOCU | 58 | 4610698 | -2 |
| Average | 51.3 | 3548746 | -4.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.3 hedge funds with bullish positions and the average amount invested in these stocks was $3549 million. That figure was $2713 million in BEKE’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Honda Motor Co Ltd (NYSE:HMC) is the least popular one with only 10 bullish hedge fund positions. KE Holdings Inc (NYSE:BEKE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BEKE is 44.5. 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 negative signal and 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately BEKE wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BEKE investors were disappointed as the stock returned -53.8% since the end of June (through 10/15) 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 in 2021.
Follow Ke Holdings Inc. (NYSE:BEKE)
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Disclosure: None. This article was originally published at Insider Monkey.
