You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Hedge fund interest in Qunar Cayman Islands Ltd (NASDAQ:QUNR) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Abengoa Yield PLC (NASDAQ:ABY), Grand Canyon Education Inc (NASDAQ:LOPE), and Rowan Companies PLC (NYSE:RDC) 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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Now, let’s view the new action encompassing Qunar Cayman Islands Ltd (NASDAQ:QUNR).
How are hedge funds trading Qunar Cayman Islands Ltd (NASDAQ:QUNR)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards QUNR over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Matthew Hulsizer’s PEAK6 Capital Management has the biggest position in Qunar Cayman Islands Ltd (NASDAQ:QUNR), worth close to $3 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is PEAK6 Capital Management, led by Matthew Hulsizer, which holds a $2.2 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise John Burbank’s Passport Capital, and D. E. Shaw’s D E Shaw, one of the biggest hedge funds in the world. 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.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let’s also examine hedge fund activity in other stocks similar to Qunar Cayman Islands Ltd (NASDAQ:QUNR). These stocks are Abengoa Yield PLC (NASDAQ:ABY), Grand Canyon Education Inc (NASDAQ:LOPE), Rowan Companies PLC (NYSE:RDC), and Masonite International Corp (NYSE:DOOR). This group of stocks’ market caps are similar to QUNR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABY | 13 | 385412 | 1 |
| LOPE | 19 | 133360 | 0 |
| RDC | 26 | 412625 | 2 |
| DOOR | 21 | 339628 | -6 |
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $318 million. That figure was $10 million in QUNR’s case. Rowan Companies PLC (NYSE:RDC) is the most popular stock in this table. On the other hand Abengoa Yield PLC (NASDAQ:ABY) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Qunar Cayman Islands Ltd (NASDAQ:QUNR) is even less popular than ABY. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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