The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought NetEase, Inc (NASDAQ:NTES) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
NetEase, Inc (NASDAQ:NTES) shareholders have witnessed a decrease in hedge fund interest in recent months. NetEase, Inc (NASDAQ:NTES) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 49. There were 43 hedge funds in our database with NTES holdings at the end of June. Our calculations also showed that NTES isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Daniel Sundheim of D1 Capital Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let’s take a peek at the fresh hedge fund action surrounding NetEase, Inc (NASDAQ:NTES).
Do Hedge Funds Think NTES Is A Good Stock To Buy Now?
At the end of September, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the previous quarter. By comparison, 45 hedge funds held shares or bullish call options in NTES 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.
The largest stake in NetEase, Inc (NASDAQ:NTES) was held by Orbis Investment Management, which reported holding $1393.1 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $149.2 million position. Other investors bullish on the company included D1 Capital Partners, Alkeon Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Orbis Investment Management allocated the biggest weight to NetEase, Inc (NASDAQ:NTES), around 9.57% of its 13F portfolio. Cavalry Asset Management is also relatively very bullish on the stock, designating 2.32 percent of its 13F equity portfolio to NTES.
Judging by the fact that NetEase, Inc (NASDAQ:NTES) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that slashed their positions entirely heading into Q4. Interestingly, Rajiv Jain’s GQG Partners cut the largest stake of the 750 funds watched by Insider Monkey, comprising an estimated $319.4 million in stock. Gabriel Plotkin’s fund, Melvin Capital Management, also dumped its stock, about $190.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 11 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NetEase, Inc (NASDAQ:NTES) but similarly valued. These stocks are Air Products & Chemicals, Inc. (NYSE:APD), Ford Motor Company (NYSE:F), ING Groep N.V. (NYSE:ING), Twilio Inc. (NYSE:TWLO), Emerson Electric Co. (NYSE:EMR), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), and Relx PLC (NYSE:RELX). This group of stocks’ market valuations are closest to NTES’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APD | 32 | 528730 | -8 |
| F | 51 | 1642491 | -4 |
| ING | 8 | 693351 | -1 |
| TWLO | 96 | 6369513 | -2 |
| EMR | 41 | 671007 | -4 |
| CRWD | 74 | 6742307 | 8 |
| RELX | 7 | 66312 | 1 |
| Average | 44.1 | 2387673 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.1 hedge funds with bullish positions and the average amount invested in these stocks was $2388 million. That figure was $2327 million in NTES’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 7 bullish hedge fund positions. NetEase, Inc (NASDAQ:NTES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NTES is 27.6. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on NTES as the stock returned 21.3% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
