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Did Hedge Funds Drop The Ball On Baozun Inc (BZUN) ?

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Baozun Inc (NASDAQ:BZUN).

Hedge fund interest in Baozun Inc (NASDAQ:BZUN) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BZUN to other stocks including EVO Payments, Inc. (NASDAQ:EVOP), Mednax Inc. (NYSE:MD), and Inter Parfums, Inc. (NASDAQ:IPAR) to get a better sense of its popularity.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

MOORE GLOBAL INVESTMENTS

Let’s review the recent hedge fund action encompassing Baozun Inc (NASDAQ:BZUN).

What does smart money think about Baozun Inc (NASDAQ:BZUN)?

At Q1’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BZUN over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

BZUN_jun2019

More specifically, Kylin Management was the largest shareholder of Baozun Inc (NASDAQ:BZUN), with a stake worth $14.8 million reported as of the end of March. Trailing Kylin Management was Moore Global Investments, which amassed a stake valued at $14.5 million. Citadel Investment Group, Indus Capital, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Seeing as Baozun Inc (NASDAQ:BZUN) has faced falling interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds that slashed their positions entirely heading into Q3. Interestingly, Benjamin A. Smith’s Laurion Capital Management dumped the largest stake of the 700 funds tracked by Insider Monkey, valued at close to $10.9 million in stock. Charles Clough’s fund, Clough Capital Partners, also dropped its stock, about $3.7 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Baozun Inc (NASDAQ:BZUN) but similarly valued. These stocks are EVO Payments, Inc. (NASDAQ:EVOP), Mednax Inc. (NYSE:MD), Inter Parfums, Inc. (NASDAQ:IPAR), and Edgewell Personal Care Company (NYSE:EPC). This group of stocks’ market valuations are closest to BZUN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EVOP 13 61327 3
MD 23 298044 -2
IPAR 22 98080 11
EPC 19 179921 1
Average 19.25 159343 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $61 million in BZUN’s case. Mednax Inc. (NYSE:MD) is the most popular stock in this table. On the other hand EVO Payments, Inc. (NASDAQ:EVOP) is the least popular one with only 13 bullish hedge fund positions. Baozun Inc (NASDAQ:BZUN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on BZUN as the stock returned 17.7% during the same time frame and outperformed the market by an even larger margin.

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

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