Sea Limited (NYSE:SE) has seen an increase in enthusiasm from smart money in recent months. Sea Limited (NYSE:SE) was in 82 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 76. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Now we’re going to check out the key hedge fund action encompassing Sea Limited (NYSE:SE).
Hedge fund activity in Sea Limited (NYSE:SE)
At second quarter’s end, a total of 82 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 60 hedge funds held shares or bullish call options in SE 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.
More specifically, Tiger Global Management LLC was the largest shareholder of Sea Limited (NYSE:SE), with a stake worth $896.4 million reported as of the end of September. Trailing Tiger Global Management LLC was Composite Capital, which amassed a stake valued at $625 million. Kora Management, GQG Partners, and Coatue Management 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 Karst Peak Capital allocated the biggest weight to Sea Limited (NYSE:SE), around 73.71% of its 13F portfolio. Kora Management is also relatively very bullish on the stock, dishing out 67.45 percent of its 13F equity portfolio to SE.
As industrywide interest jumped, key money managers have jumped into Sea Limited (NYSE:SE) headfirst. Tybourne Capital Management, managed by Eashwar Krishnan, created the largest position in Sea Limited (NYSE:SE). Tybourne Capital Management had $208.1 million invested in the company at the end of the quarter. Gabriel Plotkin’s Melvin Capital Management also initiated a $134.1 million position during the quarter. The other funds with brand new SE positions are Renaissance Technologies, Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital, and Robert Pitts’s Steadfast Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sea Limited (NYSE:SE) but similarly valued. We will take a look at Truist Financial Corporation (NYSE:TFC), CNOOC Limited (NYSE:CEO), Boston Scientific Corporation (NYSE:BSX), Intercontinental Exchange Inc (NYSE:ICE), The Bank of Nova Scotia (NYSE:BNS), Newmont Corporation (NYSE:NEM), and Deere & Company (NYSE:DE). This group of stocks’ market valuations match SE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TFC | 33 | 287639 | -1 |
| CEO | 13 | 166646 | 2 |
| BSX | 66 | 2312667 | 7 |
| ICE | 60 | 2754652 | -1 |
| BNS | 13 | 252173 | 1 |
| NEM | 55 | 2418239 | 12 |
| DE | 32 | 839882 | -12 |
| Average | 38.9 | 1290271 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.9 hedge funds with bullish positions and the average amount invested in these stocks was $1290 million. That figure was $6358 million in SE’s case. Boston Scientific Corporation (NYSE:BSX) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Sea Limited (NYSE:SE) is more popular among hedge funds. Our overall hedge fund sentiment score for SE is 90. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 29.2% in 2020 through October 16th but still managed to beat the market by 19.7 percentage points. Hedge funds were also right about betting on SE as the stock returned 54% since the end of June (through 10/16) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
