58.com Inc (ADR) (NYSE:WUBA) is in the news today after one of its board of directors, Dong Yang, announced that he will resign effective May 25, 2016. The resignation isn’t due to any disagreement with 58.com regarding its finance, business, accounting, or any other affairs. 58.com’s board has already appointed Chi Zhang to replace Dong Yang. CEO Michael Jinbo Yao commented,
“On behalf of the Board and the company, I would like to thank Dong for the contributions that he has made during his tenure on the Board, and wish him continued success in the future.”
58.com Inc (ADR) (NYSE:WUBA) shares are down 23% year-to-date and could use some new thinking to drive earnings higher. Meanwhile, among hedge funds, 58.com is not very popular, although it registered an increase in the number of funds with long positions during the first quarter of 2016.
At Insider Monkey, we pore over the filings of more than 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not 58.com Inc (ADR) (NYSE:WUBA) makes for a good investment right now.
58.com Inc (ADR) (NYSE:WUBA) was in 27 hedge funds’ portfolios at the end of March. WUBA shareholders have witnessed an increase in support from the world’s most elite money managers lately as there were 25 hedge funds in our database with WUBA holdings at the end of the previous quarter. At the end of this article we will also compare WUBA to other stocks including AGL Resources Inc. (NYSE:GAS), Enbridge Energy Partners, L.P. (NYSE:EEP), and Shire PLC (ADR) (NASDAQ:SHPG) to get a better sense of its popularity.
Today there are a multitude of signals investors can use to size up publicly traded companies. Some of the most under-the-radar signals are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the best money managers can outpace their index-focused peers by a very impressive amount (see the details here).
According to Insider Monkey’s hedge fund database, Andreas Halvorsen’s Viking Global has the largest position in 58.com Inc (ADR) (NYSE:WUBA), worth close to $161.3 million, comprising 0.7% of its total 13F portfolio. The second most bullish fund manager is J Kevin Kenny Jr of Emerging Sovereign Group, with a $85.5 million position; 5.2% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish include Daniel S. Och’s OZ Management, Lei Zhang’s Hillhouse Capital Management and Ted Kang’s Kylin Management.
On the next page, we are going to take a closer look at some funds that initiated stakes in 58.com during the first three months of 2016.
Consequently, some big names have been driving this bullishness. Jericho Capital Asset Management, managed by Josh Resnick, assembled the largest position in 58.com Inc (ADR) (NYSE:WUBA). Jericho Capital Asset Management had $21.2 million invested in the company at the end of the first quarter. Ken Griffin’s Citadel Investment Group also initiated a $4.5 million position during the quarter. The other funds with brand new WUBA positions are Louis Bacon’s Moore Global Investments, Simon Sadler’s Segantii Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as 58.com Inc (ADR) (NYSE:WUBA) but similarly valued. We will take a look at AGL Resources Inc. (NYSE:GAS), Enbridge Energy Partners, L.P. (NYSE:EEP), Shire PLC (ADR) (NASDAQ:SHPG), and Western Gas Equity Partners LP (NYSE:WGP). This group of stocks’ market valuations resemble WUBA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GAS | 27 | 500155 | 2 |
| EEP | 7 | 23066 | 2 |
| SHPG | 49 | 2577491 | 9 |
| WGP | 8 | 46362 | 1 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $787 million. That figure was $736 million in WUBA’s case. Shire PLC (ADR) (NASDAQ:SHPG) is the most popular stock in this table. On the other hand Enbridge Energy Partners, L.P. (NYSE:EEP) is the least popular one with only 7 bullish hedge fund positions. 58.com Inc (ADR) (NYSE:WUBA) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SHPG might be a better candidate to consider a long position.
Disclosure: None
