It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a foolproof strategy for generating returns, as even the collective wisdom of top hedge funds gets it wrong sometimes, as in the case of some of their top picks from the index like Micron and Anadarko.. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.
Phoenix New Media Ltd ADR (NYSE:FENG) was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. FENG has seen a decrease in support from the world’s most elite money managers in recent months. There were 7 hedge funds in our database with FENG positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Whitestone REIT (NYSE:WSR), NanoString Technologies Inc (NASDAQ:NSTG), and Apigee Corp (NASDAQ:APIC) to gather more data points.
According to most stock holders, hedge funds are seen as slow, old investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our researchers look at the crème de la crème of this group, approximately 700 funds. These money managers shepherd bulk of the hedge fund industry’s total capital, and by shadowing their highest performing investments, Insider Monkey has uncovered various investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to check out the latest action encompassing Phoenix New Media Ltd ADR (NYSE:FENG).
How have hedgies been trading Phoenix New Media Ltd ADR (NYSE:FENG)?
Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, International Value Advisers, managed by Charles de Vaulx, holds the largest position in Phoenix New Media Ltd ADR (NYSE:FENG). International Value Advisers has an $15.2 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with an $3.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish consist of D. E. Shaw’s D E Shaw, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners and Israel Englander’s Millennium Management.
Since Phoenix New Media Ltd ADR (NYSE:FENG) has witnessed a declination in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedge funds who were dropping their full holdings in the third quarter. Interestingly, Eric Semler’s TCS Capital Management said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $2.6 million in stock, and Emanuel J. Friedman’s EJF Capital was right behind this move, as the fund dropped about $1.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Phoenix New Media Ltd ADR (NYSE:FENG) but similarly valued. These stocks are Whitestone REIT (NYSE:WSR), NanoString Technologies Inc (NASDAQ:NSTG), Apigee Corp (NASDAQ:APIC), and Barrett Business Services, Inc. (NASDAQ:BBSI). All of these stocks’ market caps are closest to FENG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WSR | 9 | 13150 | 1 |
| NSTG | 11 | 91320 | 0 |
| APIC | 8 | 42278 | -1 |
| BBSI | 11 | 14155 | 1 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $21 million in FENG’s case. NanoString Technologies Inc (NASDAQ:NSTG) is the most popular stock in this table, while Apigee Corp (NASDAQ:APIC) is the least popular one with only 8 bullish hedge fund positions. With only 5 bullish hedge fund positions Phoenix New Media Ltd ADR (NYSE:FENG) is even less popular than APIC. It is possible that hedge funds aren’t fond of this stock because they think of it as overvalued, due to them not being introduced to the bullish thesis. In any case, to comprehend why the smart money isn’t behind this stock, more research is needed.
