Where Do Hedge Funds Stand On Fang Holdings Limited (SFUN)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Fang Holdings Limited (NYSE:SFUN).

Fang Holdings Limited (NYSE:SFUN) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. Our calculations also showed that SFUN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare SFUN to other stocks including Biofrontera AG (NASDAQ:BFRA), Tanzanian Gold Corporation (NYSE:TRX), and Armata Pharmaceuticals, Inc. (NYSE:ARMP) to get a better sense of its popularity.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Lei Zhang of Hillhouse Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $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. Now we’re going to take a look at the key hedge fund action surrounding Fang Holdings Limited (NYSE:SFUN).

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

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SFUN over the last 23 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Hillhouse Capital Management, managed by Lei Zhang, holds the largest position in Fang Holdings Limited (NYSE:SFUN). Hillhouse Capital Management has a $4.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Renaissance Technologies, which holds a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Hillhouse Capital Management allocated the biggest weight to Fang Holdings Limited (NYSE:SFUN), around 0.04% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, designating 0.0025 percent of its 13F equity portfolio to SFUN.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks similar to Fang Holdings Limited (NYSE:SFUN). We will take a look at Biofrontera AG (NASDAQ:BFRA), Tanzanian Gold Corporation (NYSE:TRX), Armata Pharmaceuticals, Inc. (NYSE:ARMP), JMP Group LLC (NYSE:JMP), Adams Resources & Energy Inc (NYSE:AE), Qumu Corp (NASDAQ:QUMU), and Assertio Holdings Inc. (NASDAQ:ASRT). This group of stocks’ market valuations match SFUN’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $5 million in SFUN’s case. Qumu Corp (NASDAQ:QUMU) is the most popular stock in this table. On the other hand JMP Group LLC (NYSE:JMP) is the least popular one with only 1 bullish hedge fund positions. Fang Holdings Limited (NYSE:SFUN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SFUN is 29.5. 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately SFUN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SFUN investors were disappointed as the stock returned -5.7% since the end of March (through 6/11) 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.

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