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 750 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 Yandex NV (NASDAQ:YNDX).
Is Yandex NV (NASDAQ:YNDX) ready to rally soon? Prominent investors are taking an optimistic view. The number of long hedge fund bets went up by 7 in recent months. Our calculations also showed that YNDX isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s analyze the key hedge fund action surrounding Yandex NV (NASDAQ:YNDX).
Hedge fund activity in Yandex NV (NASDAQ:YNDX)
Heading into the second quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from one quarter earlier. By comparison, 48 hedge funds held shares or bullish call options in YNDX a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Sachem Head Capital was the largest shareholder of Yandex NV (NASDAQ:YNDX), with a stake worth $124.7 million reported as of the end of March. Trailing Sachem Head Capital was Cadian Capital, which amassed a stake valued at $111.9 million. Light Street Capital, Lakewood Capital Management, and Discovery Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers have been driving this bullishness. Sachem Head Capital, managed by Scott Ferguson, assembled the biggest position in Yandex NV (NASDAQ:YNDX). Sachem Head Capital had $124.7 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also initiated a $44.2 million position during the quarter. The other funds with brand new YNDX positions are D. E. Shaw’s D E Shaw, Leon Shaulov’s Maplelane Capital, and Eli Cohen’s Crescent Park Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Yandex NV (NASDAQ:YNDX) but similarly valued. We will take a look at Alliant Energy Corporation (NASDAQ:LNT), InterContinental Hotels Group PLC (NYSE:IHG), DENTSPLY SIRONA Inc. (NASDAQ:XRAY), and Melco Resorts & Entertainment Limited (NASDAQ:MLCO). This group of stocks’ market valuations match YNDX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LNT | 17 | 608429 | -11 |
| IHG | 5 | 21218 | -2 |
| XRAY | 31 | 1834188 | 4 |
| MLCO | 22 | 394196 | 1 |
| Average | 18.75 | 714508 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $715 million. That figure was $844 million in YNDX’s case. DENTSPLY SIRONA Inc. (NASDAQ:XRAY) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 5 bullish hedge fund positions. Yandex NV (NASDAQ:YNDX) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on YNDX as the stock returned 6% 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.
