Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Sea Limited (NYSE:SE).
Is Sea Limited (NYSE:SE) the right pick for your portfolio? Hedge funds were becoming less hopeful. The number of long hedge fund bets were trimmed by 17 recently. Sea Limited (NYSE:SE) was in 98 hedge funds’ portfolios at the end of March. The all time high for this statistic is 115. Our calculations also showed that SE ranked 21st among the 30 most popular stocks among hedge funds (click for Q1 rankings).
If you’d ask most shareholders, hedge funds are viewed as worthless, old investment tools of yesteryear. While there are more than 8000 funds in operation today, Our researchers choose to focus on the top tier of this club, around 850 funds. It is estimated that this group of investors watch over the lion’s share of the smart money’s total asset base, and by following their inimitable investments, Insider Monkey has come up with many investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
John Armitage of Egerton Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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. With all of this in mind we’re going to take a peek at the latest hedge fund action regarding Sea Limited (NYSE:SE).
Do Hedge Funds Think SE Is A Good Stock To Buy Now?
At Q1’s end, a total of 98 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 76 hedge funds with a bullish position in SE a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Tiger Global Management LLC, managed by Chase Coleman, holds the number one position in Sea Limited (NYSE:SE). Tiger Global Management LLC has a $2.1219 billion position in the stock, comprising 4.9% of its 13F portfolio. The second largest stake is held by Kora Management, managed by Nitin Saigal and Dan Jacobs, which holds a $777.7 million position; 79.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism include Philippe Laffont’s Coatue Management, Catherine D. Wood’s ARK Investment Management and Christopher Lyle’s SCGE Management. In terms of the portfolio weights assigned to each position Kora Management allocated the biggest weight to Sea Limited (NYSE:SE), around 79.42% of its 13F portfolio. ShawSpring Partners is also relatively very bullish on the stock, designating 30.39 percent of its 13F equity portfolio to SE.
Because Sea Limited (NYSE:SE) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few money managers that elected to cut their full holdings last quarter. Intriguingly, Rajiv Jain’s GQG Partners dropped the biggest position of all the hedgies watched by Insider Monkey, valued at an estimated $458.9 million in stock, and Gabriel Plotkin’s Melvin Capital Management was right behind this move, as the fund dropped about $129.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 17 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Sea Limited (NYSE:SE). We will take a look at General Electric Company (NYSE:GE), BlackRock, Inc. (NYSE:BLK), American Express Company (NYSE:AXP), PetroChina Company Limited (NYSE:PTR), Airbnb, Inc. (NASDAQ:ABNB), The Goldman Sachs Group, Inc. (NYSE:GS), and 3M Company (NYSE:MMM). All of these stocks’ market caps match SE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GE | 68 | 6166147 | -1 |
| BLK | 42 | 1524856 | -11 |
| AXP | 53 | 24475341 | -7 |
| PTR | 8 | 73088 | 3 |
| ABNB | 52 | 2417824 | -16 |
| GS | 77 | 5057213 | 1 |
| MMM | 41 | 1519815 | -3 |
| Average | 48.7 | 5890612 | -4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.7 hedge funds with bullish positions and the average amount invested in these stocks was $5891 million. That figure was $10433 million in SE’s case. The Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Sea Limited (NYSE:SE) is more popular among hedge funds. Our overall hedge fund sentiment score for SE is 63.6. 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 returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on SE as the stock returned 24.4% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Sea Ltd (NYSE:SE)
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Disclosure: None. This article was originally published at Insider Monkey.
