Is Sohu.com Inc (SOHU) Going to Burn These Hedge Funds?

Sohu.com Inc (NASDAQ:SOHU) was in 15 hedge funds’ portfolio at the end of March. SOHU has experienced a decrease in hedge fund interest of late. There were 17 hedge funds in our database with SOHU positions at the end of the previous quarter.

In the 21st century investor’s toolkit, there are plenty of indicators market participants can use to watch publicly traded companies. Some of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a superb margin (see just how much).

Just as key, positive insider trading sentiment is another way to parse down the investments you’re interested in. There are a variety of reasons for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if investors understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the recent action encompassing Sohu.com Inc (NASDAQ:SOHU).

What have hedge funds been doing with Sohu.com Inc (NASDAQ:SOHU)?

Heading into Q2, a total of 15 of the hedge funds we track were bullish in this stock, a change of -12% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.

When looking at the hedgies we track, William B. Gray’s Orbis Investment Management had the largest position in Sohu.com Inc (NASDAQ:SOHU), worth close to $375.6 million, comprising 3.2% of its total 13F portfolio. On Orbis Investment Management’s heels is Kerr Neilson of Platinum Asset Management, with a $122.6 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Lei Zhang’s Hillhouse Capital Management, Thomas E. Claugus’s GMT Capital and Panayotis Takis Sparaggis’s Alkeon Capital Management.

Since Sohu.com Inc (NASDAQ:SOHU) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedgies who sold off their full holdings in Q1. It’s worth mentioning that Daniel S. Och’s OZ Management dumped the largest stake of the “upper crust” of funds we track, comprising an estimated $10.2 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $3.6 million worth. These moves are interesting, as total hedge fund interest fell by 2 funds in Q1.

What have insiders been doing with Sohu.com Inc (NASDAQ:SOHU)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has seen transactions within the past 180 days. Over the latest 180-day time frame, Sohu.com Inc (NASDAQ:SOHU) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Sohu.com Inc (NASDAQ:SOHU). These stocks are Yelp Inc (NYSE:YELP), Kayak Software Corp (NASDAQ:KYAK), ValueClick Inc (NASDAQ:VCLK), Shutterfly, Inc. (NASDAQ:SFLY), and InterXion Holding NV (NYSE:INXN). This group of stocks are in the internet information providers industry and their market caps resemble SOHU’s market cap.

With the returns exhibited by Insider Monkey’s tactics, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Sohu.com Inc (NASDAQ:SOHU) is no exception.

Click here to learn why you should track hedge funds