Do Hedge Funds Love Alibaba Group Holding Ltd (BABA)?

Page 1 of 2

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Alibaba Group Holding Ltd (NYSE:BABA).

Alibaba Group Holding Ltd (NYSE:BABA) has experienced a decrease in enthusiasm from smart money of late. BABA was in 60 hedge funds’ portfolios at the end of September. There were 85 hedge funds in our database with BABA positions at the end of the previous quarter. At the end of this article we will also compare BABA to other stocks, including Gilead Sciences, Inc. (NASDAQ:GILD), Comcast Corporation (NASDAQ:CMCSK), and Novo Nordisk A/S (ADR) (NYSE:NVO) to get a better sense of its popularity.

Follow Alibaba Group Holding Limited (NYSE:BABA)

According to most stock holders, hedge funds are viewed as slow, old financial vehicles of yesteryear. While there are over 8000 funds trading at present, We hone in on the elite of this club, about 700 funds. Most estimates calculate that this group of people direct the majority of the smart money’s total capital, and by watching their finest stock picks, Insider Monkey has come up with several investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, we’re going to analyze the key action encompassing Alibaba Group Holding Ltd (NYSE:BABA).

How have hedgies been trading Alibaba Group Holding Ltd (NYSE:BABA)?

At Q3’s end, a total of 60 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 29% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Boykin Curry’s Eagle Capital Management has the most valuable position in Alibaba Group Holding Ltd (NYSE:BABA), worth close to $476.4 million, amounting to 2.1% of its total 13F portfolio. The second largest stake is held by OZ Management, led by Daniel S. Och, holding a $422.8 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Rob Citrone’s Discovery Capital Management and Eashwar Krishnan’s Tybourne Capital Management.

Page 1 of 2