With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Momo Inc (NASDAQ:MOMO).
Is Momo Inc (NASDAQ:MOMO) a marvelous investment today? Hedge funds are in an optimistic mood. The number of bullish hedge fund bets advanced by 1 in recent months. However, overall hedge fund sentiment towards the stock is no where near the levels we saw a year ago. Our calculations also showed that MOMO isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are perceived as unimportant, outdated financial tools of the past. While there are more than 8000 funds trading today, We look at the elite of this group, approximately 750 funds. These hedge fund managers direct most of all hedge funds’ total capital, and by shadowing their unrivaled equity investments, Insider Monkey has unsheathed numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the new hedge fund action surrounding Momo Inc (NASDAQ:MOMO).
What does smart money think about Momo Inc (NASDAQ:MOMO)?
Heading into the third quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MOMO over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Momo Inc (NASDAQ:MOMO) was held by Renaissance Technologies, which reported holding $478.1 million worth of stock at the end of March. It was followed by Platinum Asset Management with a $95.8 million position. Other investors bullish on the company included Yiheng Capital, Kylin Management, and Bloom Tree Partners.
Now, some big names were leading the bulls’ herd. Kylin Management, managed by Ted Kang, established the most outsized position in Momo Inc (NASDAQ:MOMO). Kylin Management had $45.6 million invested in the company at the end of the quarter. Alok Agrawal’s Bloom Tree Partners also made a $38.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Gifford Combs’s Dalton Investments, Lee Ainslie’s Maverick Capital, and Warren Lammert’s Granite Point Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Momo Inc (NASDAQ:MOMO). These stocks are BeiGene, Ltd. (NASDAQ:BGNE), Pool Corporation (NASDAQ:POOL), Apartment Investment and Management Co. (NYSE:AIV), and Liberty Property Trust (NYSE:LPT). This group of stocks’ market valuations are closest to MOMO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BGNE | 12 | 1643941 | -3 |
| POOL | 22 | 342084 | 6 |
| AIV | 24 | 701466 | 3 |
| LPT | 19 | 337910 | 0 |
| Average | 19.25 | 756350 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $756 million. That figure was $855 million in MOMO’s case. Apartment Investment and Management Co. (NYSE:AIV) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 12 bullish hedge fund positions. Momo Inc (NASDAQ:MOMO) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MOMO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MOMO were disappointed as the stock returned -13.5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
