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Baidu, Inc. (BIDU): Were Hedge Funds Right About This Stock?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Baidu, Inc. (NASDAQ:BIDU).

Baidu, Inc. (NASDAQ:BIDU) was in 60 hedge funds’ portfolios at the end of the fourth quarter of 2019. BIDU has seen an increase in support from the world’s most elite money managers in recent months. There were 48 hedge funds in our database with BIDU holdings at the end of the previous quarter. Our calculations also showed that BIDU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In the financial world there are several indicators shareholders put to use to grade their stock investments. A duo of the less known indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a significant margin (see the details here).

Richard Driehaus of Driehaus Capital

We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the fresh hedge fund action regarding Baidu, Inc. (NASDAQ:BIDU).

What does smart money think about Baidu, Inc. (NASDAQ:BIDU)?

At the end of the fourth quarter, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BIDU over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the number one position in Baidu, Inc. (NASDAQ:BIDU), worth close to $242.3 million, accounting for 0.2% of its total 13F portfolio. The second largest stake is held by First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which holds a $234.8 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions consist of John W. Rogers’s Ariel Investments, and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position Karst Peak Capital allocated the biggest weight to Baidu, Inc. (NASDAQ:BIDU), around 21.52% of its 13F portfolio. Punch Card Capital is also relatively very bullish on the stock, dishing out 16.63 percent of its 13F equity portfolio to BIDU.

Now, some big names have been driving this bullishness. Composite Capital, managed by David Ma, established the most valuable position in Baidu, Inc. (NASDAQ:BIDU). Composite Capital had $79.9 million invested in the company at the end of the quarter. Jack Woodruff’s Candlestick Capital Management also made a $42.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Rockefeller and Karl Kroeker’s Woodline Partners, Richard Driehaus’s Driehaus Capital, and Sander Gerber’s Hudson Bay Capital Management.

Let’s go over hedge fund activity in other stocks similar to Baidu, Inc. (NASDAQ:BIDU). These stocks are Analog Devices, Inc. (NASDAQ:ADI), Infosys Limited (NYSE:INFY), L3Harris Technologies, Inc. (NYSE:LHX), and SYSCO Corporation (NYSE:SYY). This group of stocks’ market caps are similar to BIDU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADI 51 2513701 5
INFY 25 1464953 -1
LHX 48 2542147 -3
SYY 28 3021435 3
Average 38 2385559 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $2386 million. That figure was $2833 million in BIDU’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Baidu, Inc. (NASDAQ:BIDU) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 1.0% in 2020 through April 20th and still beat the market by 11 percentage points. Unfortunately BIDU wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BIDU were disappointed as the stock returned -17.2% during the three months of 2020 (through April 20th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.

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