Is Vipshop Holdings Limited (NYSE:VIPS) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is VIPS stock a buy? The best stock pickers were getting more bullish. The number of long hedge fund positions improved by 3 recently. Vipshop Holdings Limited (NYSE:VIPS) was in 27 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 42. Our calculations also showed that VIPS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here).
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to take a gander at the fresh hedge fund action surrounding Vipshop Holdings Limited (NYSE:VIPS).
Do Hedge Funds Think VIPS Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VIPS over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Vipshop Holdings Limited (NYSE:VIPS), which was worth $87.6 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $74.3 million worth of shares. Tiger Pacific Capital, Voleon Capital, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tiger Pacific Capital allocated the biggest weight to Vipshop Holdings Limited (NYSE:VIPS), around 11.19% of its 13F portfolio. Voleon Capital is also relatively very bullish on the stock, designating 6.23 percent of its 13F equity portfolio to VIPS.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Voleon Capital, managed by Michael Kharitonov and Jon David McAuliffe, established the biggest position in Vipshop Holdings Limited (NYSE:VIPS). Voleon Capital had $58.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $25 million investment in the stock during the quarter. The other funds with brand new VIPS positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Guy Shahar’s DSAM Partners, and Steve Cohen’s Point72 Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Vipshop Holdings Limited (NYSE:VIPS) but similarly valued. These stocks are ORIX Corporation (NYSE:IX), Ingersoll Rand Inc. (NYSE:IR), Qorvo Inc (NASDAQ:QRVO), TransUnion (NYSE:TRU), CDW Corporation (NASDAQ:CDW), ZoomInfo Technologies Inc. (NASDAQ:ZI), and Wheaton Precious Metals Corp. (NYSE:WPM). All of these stocks’ market caps are similar to VIPS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IX | 3 | 4453 | -1 |
| IR | 34 | 939520 | 8 |
| QRVO | 51 | 2122157 | 0 |
| TRU | 41 | 2025227 | -6 |
| CDW | 43 | 1622545 | 13 |
| ZI | 31 | 327082 | 9 |
| WPM | 34 | 755047 | 5 |
| Average | 33.9 | 1113719 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $1114 million. That figure was $525 million in VIPS’s case. Qorvo Inc (NASDAQ:QRVO) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 3 bullish hedge fund positions. Vipshop Holdings Limited (NYSE:VIPS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VIPS is 52.3. 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 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 gained 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately VIPS wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); VIPS investors were disappointed as the stock returned 3% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Vipshop Holdings Ltd (NYSE:VIPS)
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Disclosure: None. This article was originally published at Insider Monkey.
