Insider Monkey has processed numerous 13F filings of hedge funds and successful investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Zai Lab Limited (NASDAQ:ZLAB) based on that data.
Is Zai Lab Limited (NASDAQ:ZLAB) an outstanding investment now? The best stock pickers are buying. The number of bullish hedge fund bets went up by 1 lately. Our calculations also showed that zlab isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s analyze the fresh hedge fund action encompassing Zai Lab Limited (NASDAQ:ZLAB).
How are hedge funds trading Zai Lab Limited (NASDAQ:ZLAB)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ZLAB over the last 15 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Segantii Capital, managed by Simon Sadler, holds the largest position in Zai Lab Limited (NASDAQ:ZLAB). Segantii Capital has a $70.9 million position in the stock, comprising 8.3% of its 13F portfolio. Sitting at the No. 2 spot is Samuel Isaly of OrbiMed Advisors, with a $41.4 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Bihua Chen’s Cormorant Asset Management and Brad Farber’s Atika Capital.
Consequently, some big names were leading the bulls’ herd. Partner Fund Management, managed by Christopher James, assembled the most valuable position in Zai Lab Limited (NASDAQ:ZLAB). Partner Fund Management had $4.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $1.6 million investment in the stock during the quarter. The other funds with brand new ZLAB positions are Ken Griffin’s Citadel Investment Group and Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners.
Let’s now review hedge fund activity in other stocks similar to Zai Lab Limited (NASDAQ:ZLAB). We will take a look at Fanhua Inc. (NASDAQ:FANH), Meritage Homes Corp (NYSE:MTH), Hilltop Holdings Inc. (NYSE:HTH), and Delphi Technologies PLC (NYSE:DLPH). This group of stocks’ market values resemble ZLAB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FANH | 10 | 15212 | 1 |
| MTH | 14 | 177350 | 1 |
| HTH | 19 | 123299 | 5 |
| DLPH | 24 | 274206 | 6 |
| Average | 16.75 | 147517 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $167 million in ZLAB’s case. Delphi Technologies PLC (NYSE:DLPH) is the most popular stock in this table. On the other hand Fanhua Inc. (NASDAQ:FANH) is the least popular one with only 10 bullish hedge fund positions. Zai Lab Limited (NASDAQ:ZLAB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on ZLAB as the stock returned 9.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
