Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Baidu, Inc. (NASDAQ:BIDU).
Is Baidu, Inc. (NASDAQ:BIDU) a cheap investment today? Hedge funds are betting on the stock. The number of bullish hedge fund bets went up by 12 in recent months. Our calculations also showed that BIDU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). BIDU was in 60 hedge funds’ portfolios at the end of December. There were 48 hedge funds in our database with BIDU positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most shareholders, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are greater than 8000 funds in operation at present, Our experts hone in on the moguls of this group, approximately 850 funds. It is estimated that this group of investors command the majority of all hedge funds’ total asset base, and by keeping track of their best stock picks, Insider Monkey has found a few investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now let’s go over the recent hedge fund action encompassing Baidu, Inc. (NASDAQ:BIDU).
How are hedge funds trading Baidu, Inc. (NASDAQ:BIDU)?
At the end of the fourth quarter, a total of 60 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BIDU over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Baidu, Inc. (NASDAQ:BIDU), with a stake worth $242.3 million reported as of the end of September. Trailing Renaissance Technologies was First Pacific Advisors LLC, which amassed a stake valued at $234.8 million. Ariel Investments, Citadel Investment Group, and Fisher Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Karst Peak Capital allocated the biggest weight to Baidu, Inc. (NASDAQ:BIDU), around 21.52% of its 13F portfolio. Punch Card Capital is also relatively very bullish on the stock, earmarking 16.63 percent of its 13F equity portfolio to BIDU.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Composite Capital, managed by David Ma, created the largest position in Baidu, Inc. (NASDAQ:BIDU). Composite Capital had $79.9 million invested in the company at the end of the quarter. Jack Woodruff’s Candlestick Capital Management also made a $42.5 million investment in the stock during the quarter. The other funds with brand new BIDU positions are Michael Rockefeller and Karl Kroeker’s Woodline Partners, Richard Driehaus’s Driehaus Capital, and Sander Gerber’s Hudson Bay Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Baidu, Inc. (NASDAQ:BIDU). These stocks are Analog Devices, Inc. (NASDAQ:ADI), Infosys Limited (NYSE:INFY), L3Harris Technologies, Inc. (NASDAQ:LHX), and SYSCO Corporation (NYSE:SYY). This group of stocks’ market caps are closest to BIDU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADI | 51 | 2513701 | 5 |
| INFY | 25 | 1464953 | -1 |
| LHX | 48 | 2542147 | -3 |
| SYY | 28 | 3021435 | 3 |
| Average | 38 | 2385559 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $2386 million. That figure was $2833 million in BIDU’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Baidu, Inc. (NASDAQ:BIDU) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Unfortunately BIDU wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BIDU were disappointed as the stock returned -4.5% during the first two months of 2020 (through March 2nd) 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 most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
