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 Tuniu Corporation (NASDAQ:TOUR).
Tuniu Corporation (NASDAQ:TOUR) has experienced an increase in hedge fund interest of late. Tuniu Corporation (NASDAQ:TOUR) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 10. There were 3 hedge funds in our database with TOUR holdings at the end of December. Our calculations also showed that TOUR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 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.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. With all of this in mind we’re going to check out the fresh hedge fund action surrounding Tuniu Corporation (NASDAQ:TOUR).
Do Hedge Funds Think TOUR Is A Good Stock To Buy Now?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in TOUR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Jonathan Guo’s Yiheng Capital has the most valuable position in Tuniu Corporation (NASDAQ:TOUR), worth close to $21.1 million, comprising 1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, which holds a $2.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish comprise Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Tuniu Corporation (NASDAQ:TOUR), around 0.96% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0035 percent of its 13F equity portfolio to TOUR.
As one would reasonably expect, some big names have jumped into Tuniu Corporation (NASDAQ:TOUR) headfirst. Millennium Management, managed by Israel Englander, established the biggest position in Tuniu Corporation (NASDAQ:TOUR). Millennium Management had $1.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Donald Sussman’s Paloma Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tuniu Corporation (NASDAQ:TOUR) but similarly valued. We will take a look at Diamond S Shipping Inc. (NYSE:DSSI), Hometrust Bancshares Inc (NASDAQ:HTBI), Gladstone Investment Corporation (NASDAQ:GAIN), IBEX Limited (NASDAQ:IBEX), Autolus Therapeutics plc (NASDAQ:AUTL), Kirkland’s, Inc. (NASDAQ:KIRK), and Eros STX Global Corporation (NYSE:ESGC). This group of stocks’ market caps are similar to TOUR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DSSI | 9 | 20879 | -2 |
| HTBI | 9 | 59658 | -2 |
| GAIN | 4 | 1928 | -1 |
| IBEX | 3 | 22990 | -1 |
| AUTL | 13 | 45104 | 5 |
| KIRK | 21 | 140912 | 3 |
| ESGC | 14 | 50781 | 7 |
| Average | 10.4 | 48893 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $27 million in TOUR’s case. Kirkland’s, Inc. (NASDAQ:KIRK) is the most popular stock in this table. On the other hand IBEX Limited (NASDAQ:IBEX) is the least popular one with only 3 bullish hedge fund positions. Tuniu Corporation (NASDAQ:TOUR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TOUR is 34.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately TOUR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TOUR investors were disappointed as the stock returned -29.5% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Tuniu Corp (NASDAQ:TOUR)
Follow Tuniu Corp (NASDAQ:TOUR)
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Disclosure: None. This article was originally published at Insider Monkey.
