Is YSG Stock A Buy or Sell?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Yatsen Holding Limited (NYSE:YSG).

Is YSG stock a buy? Investors who are in the know were getting more bullish. The number of bullish hedge fund bets inched up by 26 recently. Yatsen Holding Limited (NYSE:YSG) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. Our calculations also showed that YSG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chase Coleman of Tiger Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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. Now we’re going to go over the fresh hedge fund action surrounding Yatsen Holding Limited (NYSE:YSG).

Do Hedge Funds Think YSG Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in YSG a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Yatsen Holding Limited (NYSE:YSG) was held by Tiger Global Management LLC, which reported holding $97.1 million worth of stock at the end of December. It was followed by Candlestick Capital Management with a $45.5 million position. Other investors bullish on the company included Hillhouse Capital Management, Alkeon Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Boyu Capital allocated the biggest weight to Yatsen Holding Limited (NYSE:YSG), around 2.18% of its 13F portfolio. One01 Capital is also relatively very bullish on the stock, setting aside 1.08 percent of its 13F equity portfolio to YSG.

There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Yatsen Holding Limited (NYSE:YSG) but similarly valued. We will take a look at Whirlpool Corporation (NYSE:WHR), Kirkland Lake Gold Ltd. (NYSE:KL), Vail Resorts, Inc. (NYSE:MTN), Apollo Global Management Inc (NYSE:APO), Paylocity Holding Corp (NASDAQ:PCTY), Carlyle Group Inc (NASDAQ:CG), and The Scotts Miracle-Gro Company (NYSE:SMG). All of these stocks’ market caps are closest to YSG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $858 million. That figure was $311 million in YSG’s case. Whirlpool Corporation (NYSE:WHR) is the most popular stock in this table. On the other hand Carlyle Group Inc (NASDAQ:CG) is the least popular one with only 21 bullish hedge fund positions. Yatsen Holding Limited (NYSE:YSG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for YSG is 46.4. 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 YSG wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); YSG investors were disappointed as the stock returned -40.9% 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.

Disclosure: None. This article was originally published at Insider Monkey.

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