We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article we look at what those investors think of China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU).
China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) has experienced an increase in hedge fund sentiment lately. CHU was in 12 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with CHU holdings at the end of the previous quarter. 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 Cognizant Technology Solutions Corp (NASDAQ:CTSH), CSX Corporation (NYSE:CSX), and HCA Holdings Inc (NYSE:HCA) to gather more data points.
Follow China Unicom Hong Kong Ltd (NYSE:CHU)
Follow China Unicom Hong Kong Ltd (NYSE:CHU)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Hedge fund activity in China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU)
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, up by 71% from the second quarter of 2016. By comparison, 6 hedge funds held shares or bullish call options in CHU heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, has the biggest position in China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU), worth close to $18.6 million. On Renaissance Technologies’ heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $10.1 million position. Some other members of the smart money with similar optimism encompass Leon Shaulov’s Maplelane Capital and Sheetal Duggal’s Thrax Management. We should note that Maplelane Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, key money managers have jumped into China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) headfirst. Balyasny Asset Management, led by Dmitry Balyasny, established the biggest position in China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU). Balyasny Asset Management had $3.8 million invested in the company at the end of the quarter. Maplelane Capital also initiated a $3 million position during the quarter. The other funds with new positions in the stock are Jane Mendillo’s Harvard Management Co, and Mike Vranos’ Ellington.
Let’s also examine hedge fund activity in other stocks similar to China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU). These stocks are Cognizant Technology Solutions Corp (NASDAQ:CTSH), CSX Corporation (NYSE:CSX), HCA Holdings Inc (NYSE:HCA), and Norfolk Southern Corp. (NYSE:NSC). All of these stocks’ market caps are similar to CHU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTSH | 47 | 1355422 | 7 |
| CSX | 43 | 734912 | 2 |
| HCA | 62 | 3313044 | -10 |
| NSC | 36 | 758740 | 4 |
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $1541 million. That figure was $39 million in CHU’s case. HCA Holdings Inc (NYSE:HCA) is the most popular stock in this table. On the other hand Norfolk Southern Corp. (NYSE:NSC) is the least popular one with only 36 bullish hedge fund positions. Compared to these stocks China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) is even less popular than NSC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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