World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is China Biologic Products Inc (NASDAQ:CBPO) a buy, sell, or hold? The best stock pickers are becoming less hopeful. The number of bullish hedge fund bets retreated by 1 recently. Our calculations also showed that CBPO isn’t among the 30 most popular stocks among hedge funds. CBPO was in 7 hedge funds’ portfolios at the end of December. There were 8 hedge funds in our database with CBPO holdings at the end of the previous quarter.
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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a gander at the new hedge fund action encompassing China Biologic Products Inc (NASDAQ:CBPO).
Hedge fund activity in China Biologic Products Inc (NASDAQ:CBPO)
Heading into the first quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CBPO over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, York Capital Management was the largest shareholder of China Biologic Products Inc (NASDAQ:CBPO), with a stake worth $91.7 million reported as of the end of September. Trailing York Capital Management was D E Shaw, which amassed a stake valued at $9.7 million. Dalton Investments, GLG Partners, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that China Biologic Products Inc (NASDAQ:CBPO) has witnessed a decline in interest from the smart money, we can see that there is a sect of hedgies who sold off their full holdings last quarter. Interestingly, Lei Zhang’s Hillhouse Capital Management cut the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $140.1 million in stock. Peter Muller’s fund, PDT Partners, also cut its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as China Biologic Products Inc (NASDAQ:CBPO) but similarly valued. We will take a look at International Game Technology PLC (NYSE:IGT), Community Bank System, Inc. (NYSE:CBU), Stifel Financial Corp. (NYSE:SF), and Paramount Group Inc (NYSE:PGRE). This group of stocks’ market values are similar to CBPO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IGT | 34 | 590006 | -3 |
| CBU | 11 | 23103 | 2 |
| SF | 12 | 161371 | 0 |
| PGRE | 14 | 134278 | 2 |
| Average | 17.75 | 227190 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $113 million in CBPO’s case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand Community Bank System, Inc. (NYSE:CBU) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks China Biologic Products Inc (NASDAQ:CBPO) is even less popular than CBU. Hedge funds clearly dropped the ball on CBPO as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on CBPO as the stock returned 29.3% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
