Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Is Autohome Inc (ADR) (NYSE:ATHM) the right investment to pursue these days? Money managers are actually in a pessimistic mood. The number of long hedge fund positions that are disclosed in regulatory 13F filings contracted by1 recently. ATHM was in 13 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with ATHM 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 Acadia Realty Trust (NYSE:AKR), Brandywine Realty Trust (NYSE:BDN), and MGIC Investment Corp. (NYSE:MTG) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How are hedge funds trading Autohome Inc (ADR) (NYSE:ATHM)?
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, down by 7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATHM over the last 5 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Select Equity Group, led by Robert Joseph Caruso, holds the biggest position in Autohome Inc (ADR) (NYSE:ATHM). Select Equity Group has a $52.5 million position in the stock. Coming in second is Josh Resnick of Jericho Capital Asset Management, with a $31.2 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Run Ye, Junji Takegami and Hoyon Hwang’s Tiger Pacific Capital, Ken Griffin’s Citadel Investment Group and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Since Autohome Inc (ADR) (NYSE:ATHM) has weathered declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Larry Chen and Terry Zhang’s Tairen Capital got rid of the biggest position of all the investors monitored by Insider Monkey, valued at an estimated $4.7 million in stock, and Sahm Adrangi’s Kerrisdale Capital was right behind this move, as the fund said goodbye to about $2.6 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Autohome Inc (ADR) (NYSE:ATHM). These stocks are Acadia Realty Trust (NYSE:AKR), Brandywine Realty Trust (NYSE:BDN), MGIC Investment Corp. (NYSE:MTG), and Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). This group of stocks’ market values are closest to ATHM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AKR | 6 | 113912 | -5 |
| BDN | 12 | 43353 | -1 |
| MTG | 36 | 545424 | -10 |
| SBGI | 32 | 346772 | -1 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $262 million. That figure was $179 million in ATHM’s case. MGIC Investment Corp. (NYSE:MTG) is the most popular stock in this table. On the other hand Acadia Realty Trust (NYSE:AKR) is the least popular one with only 6 bullish hedge fund positions. Autohome Inc (ADR) (NYSE:ATHM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MTG might be a better candidate to consider taking a long position in.
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Disclosure: None
