The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Noah Holdings Limited (NYSE:NOAH).
Noah Holdings Limited (NYSE:NOAH) has seen a decrease in hedge fund interest in recent months. NOAH was in 12 hedge funds’ portfolios at the end of the second quarter of 2019. There were 14 hedge funds in our database with NOAH holdings at the end of the previous quarter. Our calculations also showed that NOAH isn’t among the 30 most popular stocks among hedge funds (view video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
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 fresh hedge fund action encompassing Noah Holdings Limited (NYSE:NOAH).
What have hedge funds been doing with Noah Holdings Limited (NYSE:NOAH)?
At Q2’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NOAH over the last 16 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Noah Holdings Limited (NYSE:NOAH) was held by Yiheng Capital, which reported holding $128.4 million worth of stock at the end of March. It was followed by Tiger Pacific Capital with a $75.3 million position. Other investors bullish on the company included Dalton Investments, Citadel Investment Group, and Prescott Group Capital Management.
Since Noah Holdings Limited (NYSE:NOAH) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there is a sect of hedge funds that decided to sell off their positions entirely last quarter. At the top of the heap, Kerr Neilson’s Platinum Asset Management sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $21.8 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund sold off about $5.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Noah Holdings Limited (NYSE:NOAH) but similarly valued. These stocks are Integer Holdings Corporation (NYSE:ITGR), Element Solutions Inc (NYSE:ESI), El Paso Electric Company (NYSE:EE), and International Game Technology PLC (NYSE:IGT). This group of stocks’ market values resemble NOAH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ITGR | 18 | 189554 | -11 |
| ESI | 27 | 654107 | -5 |
| EE | 16 | 379540 | -6 |
| IGT | 30 | 280456 | -2 |
| Average | 22.75 | 375914 | -6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $376 million. That figure was $218 million in NOAH’s case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand El Paso Electric Company (NYSE:EE) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Noah Holdings Limited (NYSE:NOAH) is even less popular than EE. Hedge funds dodged a bullet by taking a bearish stance towards NOAH. 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 NOAH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NOAH investors were disappointed as the stock returned -31.4% 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.
