Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about EHang Holdings Limited (NASDAQ:EH) in this article.
Is EH a good stock to buy? The best stock pickers were turning bullish. The number of bullish hedge fund positions advanced by 2 in recent months. EHang Holdings Limited (NASDAQ:EH) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 2 hedge funds in our database with EH holdings at the end of December.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the latest hedge fund action encompassing EHang Holdings Limited (NASDAQ:EH).
Do Hedge Funds Think EH Is A Good Stock To Buy Now?
At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EH over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the number one position in EHang Holdings Limited (NASDAQ:EH), worth close to $5.1 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $2.6 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism consist of David Kowitz and Sheldon Kasowitz’s Indus Capital, Philip Best’s Quaero Capital and Donald Sussman’s Paloma Partners. In terms of the portfolio weights assigned to each position Quaero Capital allocated the biggest weight to EHang Holdings Limited (NASDAQ:EH), around 0.34% of its 13F portfolio. Indus Capital is also relatively very bullish on the stock, designating 0.17 percent of its 13F equity portfolio to EH.
As aggregate interest increased, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the biggest call position in EHang Holdings Limited (NASDAQ:EH). Citadel Investment Group had $2.6 million invested in the company at the end of the quarter. David Kowitz and Sheldon Kasowitz’s Indus Capital also made a $1 million investment in the stock during the quarter. The only other fund with a brand new EH position is Philip Best’s Quaero Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EHang Holdings Limited (NASDAQ:EH) but similarly valued. These stocks are Liberty Oilfield Services Inc. (NYSE:LBRT), bluebird bio Inc (NASDAQ:BLUE), Talend S.A. (NASDAQ:TLND), Prelude Therapeutics Incorporated (NASDAQ:PRLD), NMI Holdings Inc (NASDAQ:NMIH), Holly Energy Partners, L.P. (NYSE:HEP), and Cohu, Inc. (NASDAQ:COHU). All of these stocks’ market caps match EH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LBRT | 10 | 41393 | 2 |
| BLUE | 27 | 226229 | -1 |
| TLND | 45 | 1142089 | 18 |
| PRLD | 7 | 1340901 | -1 |
| NMIH | 25 | 262921 | 3 |
| HEP | 2 | 3616 | -1 |
| COHU | 25 | 222669 | 12 |
| Average | 20.1 | 462831 | 4.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $463 million. That figure was $7 million in EH’s case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 2 bullish hedge fund positions. EHang Holdings Limited (NASDAQ:EH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EH is 39.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately EH wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); EH investors were disappointed as the stock returned 2.2% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Ehang Holdings Ltd (NASDAQ:EH)
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Disclosure: None. This article was originally published at Insider Monkey.
