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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Weibo Corp (NASDAQ:WB) and determine whether the smart money was really smart about this stock.
Is Weibo Corp (NASDAQ:WB) the right investment to pursue these days? Hedge funds were turning less bullish. The number of long hedge fund positions were cut by 1 recently. Our calculations also showed that WB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). WB was in 10 hedge funds’ portfolios at the end of the first quarter of 2020. There were 11 hedge funds in our database with WB holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are perceived as slow, old investment tools of years past. While there are more than 8000 funds in operation at present, We look at the elite of this group, around 850 funds. These hedge fund managers have their hands on bulk of all hedge funds’ total capital, and by tracking their inimitable stock picks, Insider Monkey has unearthed various investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Ken Fisher of Fisher Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Weibo Corp (NASDAQ:WB).
Hedge fund activity in Weibo Corp (NASDAQ:WB)
At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WB over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Weibo Corp (NASDAQ:WB), with a stake worth $115.6 million reported as of the end of September. Trailing Fisher Asset Management was Half Sky Capital, which amassed a stake valued at $35.2 million. Renaissance Technologies, Citadel Investment Group, and Contrarius Investment 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 Half Sky Capital allocated the biggest weight to Weibo Corp (NASDAQ:WB), around 13.87% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, setting aside 0.85 percent of its 13F equity portfolio to WB.
Due to the fact that Weibo Corp (NASDAQ:WB) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers who sold off their full holdings heading into Q4. At the top of the heap, Kerr Neilson’s Platinum Asset Management dumped the largest stake of all the hedgies monitored by Insider Monkey, comprising about $65.8 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund cut about $11.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Weibo Corp (NASDAQ:WB) but similarly valued. We will take a look at Huntington Ingalls Industries Inc (NYSE:HII), Logitech International SA (NASDAQ:LOGI), Amdocs Limited (NASDAQ:DOX), and WestRock Company (NYSE:WRK). This group of stocks’ market values match WB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HII | 21 | 322441 | -1 |
| LOGI | 15 | 186537 | 2 |
| DOX | 23 | 444185 | -3 |
| WRK | 26 | 412009 | -9 |
| Average | 21.25 | 341293 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $183 million in WB’s case. WestRock Company (NYSE:WRK) is the most popular stock in this table. On the other hand Logitech International SA (NASDAQ:LOGI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Weibo Corp (NASDAQ:WB) is even less popular than LOGI. Hedge funds dodged a bullet by taking a bearish stance towards WB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately WB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); WB investors were disappointed as the stock returned 1.5% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
