There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Sea Limited (NYSE:SE).
Sea Limited (NYSE:SE) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds’ portfolios at the end of the third quarter of 2018. 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 Steven Madden, Ltd. (NASDAQ:SHOO), LogMeIn Inc (NASDAQ:LOGM), and Quotient Technology Inc (NYSE:COUP) to gather more data points.
According to most shareholders, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are over 8,000 funds trading at present, Our researchers choose to focus on the elite of this club, about 700 funds. These hedge fund managers have their hands on most of the smart money’s total asset base, and by keeping track of their highest performing stock picks, Insider Monkey has revealed a few investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to check out the fresh hedge fund action regarding Sea Limited (NYSE:SE).
Hedge fund activity in Sea Limited (NYSE:SE)
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, representing no change from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SE over the last 13 quarters. So, let’s check out 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 LLC, which reported holding $158.5 million worth of stock at the end of September. It was followed by Lone Pine Capital with a $54.8 million position. Other investors bullish on the company included OZ Management, Kora Management, and Alkeon Capital Management.
Since Sea Limited (NYSE:SE) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few hedge funds that elected to cut their entire stakes heading into Q3. Interestingly, Mark Kingdon’s Kingdon Capital dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth about $7.6 million in stock. Jeffrey Talpins’s fund, Element Capital Management, also sold off its stock, about $5.1 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Sea Limited (NYSE:SE). We will take a look at Steven Madden, Ltd. (NASDAQ:SHOO), LogMeIn Inc (NASDAQ:LOGM), Coupa Software Incorporated (NASDAQ:COUP), and Assured Guaranty Ltd. (NYSE:AGO). This group of stocks’ market caps match SE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHOO | 15 | 80335 | 2 |
| LOGM | 29 | 537051 | -1 |
| COUP | 39 | 1228848 | 12 |
| AGO | 33 | 615215 | 1 |
| Average | 29 | 615362 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $615 million. That figure was $411 million in SE’s case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand Steven Madden, Ltd. (NASDAQ:SHOO) is the least popular one with only 15 bullish hedge fund positions. Sea Limited (NYSE:SE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard COUP might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
