The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Sea Limited (NYSE:SE) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Sea Limited (NYSE:SE) the right investment to pursue these days? The best stock pickers were betting on the stock. The number of bullish hedge fund positions moved up by 20 lately. Sea Limited (NYSE:SE) was in 115 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 82. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SE ranked 15th among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 95 hedge funds in our database with SE holdings at the end of September.
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Philippe Laffont of Coatue Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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 (or at the end of this article). With all of this in mind let’s take a look at the latest hedge fund action regarding Sea Limited (NYSE:SE).
Do Hedge Funds Think SE Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 115 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in SE over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sea Limited (NYSE:SE) was held by Tiger Global Management, which reported holding $1836.5 million worth of stock at the end of December. It was followed by Kora Management with a $742.5 million position. Other investors bullish on the company included Coatue Management, Alkeon Capital Management, and Whale Rock Capital Management. In terms of the portfolio weights assigned to each position Greanoaks Capital allocated the biggest weight to Sea Limited (NYSE:SE), around 87.53% of its 13F portfolio. Kora Management is also relatively very bullish on the stock, setting aside 74.97 percent of its 13F equity portfolio to SE.
As aggregate interest increased, key hedge funds were breaking ground themselves. Greanoaks Capital, managed by Neil Mehta, assembled the largest position in Sea Limited (NYSE:SE). Greanoaks Capital had $301.3 million invested in the company at the end of the quarter. Tom Purcell and Marco Tablada’s Alua Capital Management also made a $205.1 million investment in the stock during the quarter. The other funds with brand new SE positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Simon Sadler’s Segantii Capital, and Ben Jacobs’s Anomaly Capital Management.
Let’s go over hedge fund activity in other stocks similar to Sea Limited (NYSE:SE). These stocks are Prologis Inc (NYSE:PLD), Square, Inc. (NYSE:SQ), Altria Group Inc (NYSE:MO), JD.Com Inc (NASDAQ:JD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), KE Holdings Inc (NYSE:BEKE), and Snowflake Inc (NYSE:SNOW). All of these stocks’ market caps resemble SE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLD | 36 | 655443 | 3 |
| SQ | 89 | 8819199 | 16 |
| MO | 37 | 1082661 | -10 |
| JD | 89 | 14395875 | 4 |
| VRTX | 53 | 3108859 | -2 |
| BEKE | 30 | 2038963 | 2 |
| SNOW | 54 | 7723382 | -5 |
| Average | 55.4 | 5403483 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 55.4 hedge funds with bullish positions and the average amount invested in these stocks was $5403 million. That figure was $10869 million in SE’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand KE Holdings Inc (NYSE:BEKE) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks Sea Limited (NYSE:SE) is more popular among hedge funds. Our overall hedge fund sentiment score for SE is 93. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7% in 2021 through March 12th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on SE as the stock returned 18.1% since the end of December (through 3/12) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
