How Hedge Funds’ Top Bets on eCommerce Are Performing So Far This Year

While customers benefit from the ease of shopping online whilst enjoying the comfort of their homes, retailers take advantage of the lower cost of doing business as they avoid a brick and mortar presence. Bringing together these two parties are the e-commerce platforms, which should ideally represent a high growth business model considering that eCommerce sales increased by 15% in the first quarter while total retail sales grew by 3.3% as compared to the same period a year ago, according to U.S. Department of Commerce. Hedge funds, however, seem to have taken precautions against turbulence in the industry as many big eCommerce companies saw a decline in popularity among the investors in our database. Before the second-quarter round of 13F filings is completed, let’s take a look back and see how the most popular eCommerce stocks performed so far this year.

At Insider Monkey, we track nearly 770 hedge funds and other institutional investors as part of our small-cap strategy, which can help a retail investor beat Mr. Market by nearly one percentage point per month (see details). Additionally, we can use the data to see how hedge funds positioned themselves towards different other individual companies.

5. Vipshop Holdings Ltd – ADR (NYSE:VIPS)

– Investors with Long Positions (as of March 31): 42

– Aggregate Value of Investors’ Holdings (as of March 31): $879 Million

Vipshop Holdings Ltd – ADR (NYSE:VIPS) is the only eCommerce company in this list that witnessed an increase in popularity as the number of funds from our database long the stock went up by eight during the first quarter. The stock of the Chinese online discount retailer inched up by around 1.60% so far this year, having recovered from a drop registered in May when the company reported mixed financial results for the first quarter and provided second-quarter revenue guidance below expectations at mid point. Nevertheless, the stock trades at around 36.3 times earnings, which makes the stock look overvalued when compared to the mean valuation for the S&P 500 of around 20.0.

4. eBay Inc (NASDAQ:EBAY)

– Investors with Long Positions (as of March 31): 57

– Aggregate Value of Investors’ Holdings (as of March 31): $2 Billion

The number of investors tracked by us bullish on eBay slid by 15 during the first three months of this year. The stock has gained over 12% since the beginning of the year, mainly due to a boost registered after the company reported its second-quarter results that came ahead of expectations. EPS of $0.43 and revenue of $2.23 billion topped the consensus estimates by $0.01 and $60 million, respectively. In addition eBay raised its third-quarter revenue guidance to the range of $21.6 billion to $2.19 billion and GAAP EPS to between $0.35 and $0.37, while for the full year, revenue guidance was increased to between $8.85 billion and $8.95 billion, while GAAP EPS guidance was raised to the range of $1.60 to $1.65.

 

3. Alibaba Group Holding Ltd (NYSE:BABA)

– Investors with Long Positions (as of March 31): 67

– Aggregate Value of Investors’ Holdings (as of March 31): $5.14 Billion

During the first three months of the year, Alibaba Group Holding Ltd (NYSE:BABA) saw the number of funds from our database bullish on the stock decline by 10. The stock of the Chinese eCommerce giant surged by more than 20% since the beginning of the year, as Alibaba managed to beat revenue estimates for three quarters in a row, while EPS came ahead of expectations for two out of the last three quarters. More specifically, Alibaba’s second-quarter EPS of $0.74, topped the estimates by $0.11, while revenue of $4.84 billion surged by 59% on the year and was $300 million ahead of the consensus estimate. The company also registered a Gross Merchandise Value of $126 billion, up by 24% on the year.

 

2. JD.Com Inc (ADR) (NASDAQ:JD)

– Investors with Long Positions (as of March 31): 73

– Aggregate Value of Investors’ Holdings (as of March 31): $5.14 Billion

The total number of investors tracked by us bullish on JD.Com Inc (ADR) (NASDAQ:JD) shrank by five during the first quarter. The stock price of the $34 billion Chinese online direct sales company slid by almost 24% so far this year. In June, Wal-Mart Stores, Inc. (NYSE:WMT) agreed to sell its Yihaodian website to JD.com in exchange for a 5% stake in the latter. For the second-quarter, JD.com posted revenue of RMB65.24 billion ($9.81 billion), up by 42% on the year, but slightly lower analysts’ estimates of RMB65.34 billion. On the other hand the company turned to a surprise adjusted profit of RMB0.29 ($0.04) per share, which topped the estimates of a loss of RMB0.19. The better-than-expected bottom line was helped by an improvement in JD.com’s gross margin, which went up to 15% from 12.9%.

 

1. Amazon.com, Inc. (NASDAQ:AMZN)

– Investors with Long Positions (as of March 31): 133

– Aggregate Value of Investors’ Holdings (as of March 31): $14.70 Billion

The hedge fund interest in Amazon.com, Inc. (NASDAQ:AMZN) declined during the first quarter as the number of funds with long positions slid by eight. The stock is trading 14% in the green so far this year helped by strong financial results and solid growth registered by Amazon Web Services. For the second quarter, Amazon posted EPS of $1.78 on revenue of $3o.4 billion (up by 31% on the year), which topped analysts’ estimates by $0.67 and $850 million, respectively, while AWS sales went up by 58% on the year to $2.89 billion. Amazon also provided third-quarter revenue guidance to between $31 billion and $33.5 billion.

 

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