At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not 21Vianet Group Inc (NASDAQ:VNET) makes for a good investment right now.
21Vianet Group Inc (NASDAQ:VNET) investors should be aware of a decrease in support from the world’s most elite money managers recently. 21Vianet Group Inc (NASDAQ:VNET) was in 30 hedge funds’ portfolios at the end of March. The all time high for this statistic is 33. There were 33 hedge funds in our database with VNET positions at the end of the fourth quarter. Our calculations also showed that VNET isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding 21Vianet Group Inc (NASDAQ:VNET).
Do Hedge Funds Think VNET Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in VNET over the last 23 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Bloom Tree Partners was the largest shareholder of 21Vianet Group Inc (NASDAQ:VNET), with a stake worth $96 million reported as of the end of March. Trailing Bloom Tree Partners was Sylebra Capital Management, which amassed a stake valued at $62.6 million. Point72 Asset Management, Jericho Capital Asset Management, and Falcon Edge Capital 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 Bloom Tree Partners allocated the biggest weight to 21Vianet Group Inc (NASDAQ:VNET), around 7.86% of its 13F portfolio. Tiger Pacific Capital is also relatively very bullish on the stock, earmarking 6.25 percent of its 13F equity portfolio to VNET.
Seeing as 21Vianet Group Inc (NASDAQ:VNET) has faced a decline in interest from hedge fund managers, we can see that there was a specific group of fund managers that elected to cut their entire stakes heading into Q2. Intriguingly, Frank Fu’s CaaS Capital said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $53.4 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $24.1 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as 21Vianet Group Inc (NASDAQ:VNET) but similarly valued. We will take a look at ChampionX Corporation (NYSE:CHX), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Selective Insurance Group (NASDAQ:SIGI), Quaker Chemical Corp (NYSE:KWR), ICU Medical, Inc. (NASDAQ:ICUI), WESCO International, Inc. (NYSE:WCC), and Cricut, Inc. (NASDAQ:CRCT). This group of stocks’ market valuations are closest to VNET’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHX | 28 | 589002 | -2 |
| HAIN | 23 | 933951 | 0 |
| SIGI | 13 | 60120 | -2 |
| KWR | 18 | 184447 | 5 |
| ICUI | 26 | 381958 | 4 |
| WCC | 28 | 1026615 | 5 |
| CRCT | 12 | 45232 | 12 |
| Average | 21.1 | 460189 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $460 million. That figure was $581 million in VNET’s case. ChampionX Corporation (NYSE:CHX) is the most popular stock in this table. On the other hand Cricut, Inc. (NASDAQ:CRCT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks 21Vianet Group Inc (NASDAQ:VNET) is more popular among hedge funds. Our overall hedge fund sentiment score for VNET is 79.3. 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. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately VNET wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VNET were disappointed as the stock returned -33.7% since the end of the first quarter (through 7/2) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
