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Is Vipshop Holdings Ltd – ADR (VIPS) Set To Rebound On Analyst Upgrade After A 20% Drop Since Late April?

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Vipshop Holdings Ltd – ADR (NYSE:VIPS)‘s stock experienced healthy first quarter, with the stock price going up by more than 40% in the first three months of 2015. The stock hit its all-time high in April, but since then, it has lost much of its mojo, plunging by around 20%. However, Summit Research Analyst Henry Guo published a report on Vipshop Holdings Ltd – ADR (NYSE:VIPS) on Monday, maintaining a ‘Buy’ rating with a price target of $35 on the stock, upside potential of nearly 50%, and the stock off to a strong start in trading this morning, up by 2.54%. Vipshop Holdings Ltd – ADR (NYSE:VIPS)’s shares have under-performed in the last few weeks mainly due to concerns surrounding weaker top line growth. But Guo feels that the company is capable of handling the top-line growth pressure. Not just Summit Research, but other firms like Stifel Nicolaus, HSBC, and Jefferies have a ‘Buy’ rating on the stock. Let’s take a look now at how hedge funds, who actually have to be bullish with their money, not just their words, feel about this stock.

Vipshop Holdings Ltd

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

Overall, hedge funds were positive on this stock, as the number of hedge funds holding positions in the stock increased to 48 at the end of the first quarter from 47 at the end of the fourth quarter. Overall, aggregate invested capital by hedge funds in the stock has also gone up to $3.22 billion by the end of the first quarter from $2.16 billion at the end of the fourth quarter. Even though the number of hedge fund positions has increased by just 1, the overall aggregate capital investment in the stock by hedge funds has increased by around 50% in the first quarter, a rather significant amount, although partly attributable to the strong first quarter performance of the stock, as mentioned above. This shows that the hedge fund sentiment is positive for Vipshop Holdings Ltd – ADR (NYSE:VIPS).

Insider activity is another metric we use to judge the viability of stocks, but there was no insider activity on Vipshop filed this year, hence the insider sentiment can be considered neutral.

Let’s take a closer look at the recent hedge fund activity on Vipshop Holdings Ltd – ADR (NYSE:VIPS).

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