Is YY Inc (ADR) (YY) Going to Burn These Hedge Funds?

Because YY Inc (ADR) (NASDAQ:YY) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of money managers that slashed their positions entirely by the end of the third quarter. Interestingly, Rob Citrone’s Discovery Capital Management cut the largest investment of the 700 funds monitored by Insider Monkey, totaling $54.3 million in call options, and Emanuel J. Friedman’s EJF Capital was right behind this move, as the fund sold off about $15.1 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 7 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as YY Inc (ADR) (NASDAQ:YY) but similarly valued. These stocks are Radius Health Inc (NASDAQ:RDUS), DCT Industrial Trust Inc. (NYSE:DCT), Ubiquiti Networks Inc (NASDAQ:UBNT), and Hill-Rom Holdings, Inc. (NYSE:HRC). This group of stocks’ market values are similar to YY’s market value.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $296 million. That figure was just $148 million in YY’s case. Radius Health Inc (NASDAQ:RDUS) is the most popular stock in this table, while DCT Industrial Trust Inc. (NYSE:DCT) is the laggard with only 8 bullish hedge fund positions. YY Inc (ADR) (NASDAQ:YY) 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 RDUS might be a better candidate to consider a long position.