Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Qutoutiao Inc. (NASDAQ:QTT)? The smart money sentiment can provide an answer to this question.
Qutoutiao Inc. (NASDAQ:QTT) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. QTT was in 7 hedge funds’ portfolios at the end of June. There were 5 hedge funds in our database with QTT positions at the end of the previous quarter. Our calculations also showed that QTT 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 21st century investor’s toolkit there are dozens of indicators stock traders employ to analyze their holdings. A pair of the most innovative indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top money managers can outpace the S&P 500 by a solid amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, 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. Let’s take a glance at the new hedge fund action regarding Qutoutiao Inc. (NASDAQ:QTT).
What does smart money think about Qutoutiao Inc. (NASDAQ:QTT)?
At the end of the second quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in QTT a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D1 Capital Partners held the most valuable stake in Qutoutiao Inc. (NASDAQ:QTT), which was worth $29.6 million at the end of the second quarter. On the second spot was D E Shaw which amassed $1.4 million worth of shares. Moreover, LMR Partners, Weld Capital Management, and Stevens Capital Management were also bullish on Qutoutiao Inc. (NASDAQ:QTT), allocating a large percentage of their portfolios to this stock.
Now, some big names were leading the bulls’ herd. D1 Capital Partners, managed by Daniel Sundheim, assembled the most outsized position in Qutoutiao Inc. (NASDAQ:QTT). D1 Capital Partners had $29.6 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1.4 million position during the quarter. The following funds were also among the new QTT investors: Minhua Zhang’s Weld Capital Management and Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Qutoutiao Inc. (NASDAQ:QTT) but similarly valued. These stocks are Garrett Motion Inc. (NYSE:GTX), Cryolife Inc (NYSE:CRY), Geopark Limited (NYSE:GPRK), and G1 Therapeutics, Inc. (NASDAQ:GTHX). This group of stocks’ market caps are similar to QTT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTX | 23 | 290830 | 4 |
| CRY | 15 | 47793 | 2 |
| GPRK | 10 | 95513 | -3 |
| GTHX | 10 | 47048 | -1 |
| Average | 14.5 | 120296 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $33 million in QTT’s case. Garrett Motion Inc. (NYSE:GTX) is the most popular stock in this table. On the other hand Geopark Limited (NYSE:GPRK) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Qutoutiao Inc. (NASDAQ:QTT) is even less popular than GPRK. Hedge funds dodged a bullet by taking a bearish stance towards QTT. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately QTT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); QTT investors were disappointed as the stock returned -6.1% 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.