Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is Baozun Inc (ADR) (NASDAQ:BZUN) a buy right now? The smart money is taking a pessimistic view. The number of bullish hedge fund bets went down by 2 recently. Baozun Inc was in 5 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with Baozun Inc positions at the end of the previous quarter. At the end of this article we will also compare Baozun Inc to other stocks including Zix Corporation (NASDAQ:ZIXI), Anthera Pharmaceuticals Inc (NASDAQ:ANTH), and World Acceptance Corp. (NASDAQ:WRLD) to get a better sense of its popularity.
In the eyes of most investors, hedge funds are viewed as unimportant, old financial tools of yesteryear. While there are over 8,000 funds trading at present, our researchers look at the masters of this club, around 700 funds. These investment experts oversee the majority of all hedge funds’ total capital, and by keeping an eye on their best stock picks, Insider Monkey has unearthed various investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to check out the new action encompassing Baozun Inc (ADR) (NASDAQ:BZUN).
Hedge fund activity in Baozun Inc (ADR) (NASDAQ:BZUN)
Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a 29% slide from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings considerably (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Hillhouse Capital Management, managed by Lei Zhang, holds the most valuable position in Baozun Inc (ADR) (NASDAQ:BZUN). Hillhouse Capital Management has a $2.4 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second-most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $1.9 million position; less than 0.1% of his fund’s 13F portfolio is allocated to the stock. Other peers that hold long positions contain Anand Parekh’s Alyeska Investment Group, Israel Englander’s Millennium Management, and Frank Slattery’s Symmetry Peak Management.
Due to the fact that Baozun Inc (ADR) (NASDAQ:BZUN) has experienced bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of funds who were dropping their positions entirely heading into Q4. Intriguingly, Andrew Weiss’ Weiss Asset Management dumped the biggest position of the 700 funds followed by Insider Monkey, worth an estimated $0.4 million in stock. Ian P. Murray’s fund, Lanexa Global Management, also said goodbye to its stock, about $0.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Baozun Inc (ADR) (NASDAQ:BZUN). These stocks are Zix Corporation (NASDAQ:ZIXI), Anthera Pharmaceuticals Inc (NASDAQ:ANTH), World Acceptance Corp. (NASDAQ:WRLD), and Viate Pharmaceuticals Inc (NASDAQ:VTAE). This group of stocks’ market valuations match Baozun Inc’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZIXI | 16 | 24485 | -1 |
| ANTH | 14 | 33309 | 3 |
| WRLD | 17 | 47604 | -1 |
| VTAE | 15 | 74982 | 6 |
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was a mere $6 million in Baozun Inc’s case. World Acceptance Corp. (NASDAQ:WRLD) is the most popular stock in this table. On the other hand Anthera Pharmaceuticals Inc (NASDAQ:ANTH) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Baozun Inc (ADR) (NASDAQ:BZUN) is even less popular than Anthera. Considering that hedge funds aren’t at all fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.
