Do Hedge Funds Love Yunji Inc. (YJ)?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Yunji Inc. (NASDAQ:YJ).

Yunji Inc. (NASDAQ:YJ) shareholders have witnessed a decrease in hedge fund interest of late. Yunji Inc. (NASDAQ:YJ) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 6. There were 4 hedge funds in our database with YJ positions at the end of the fourth quarter. Our calculations also showed that YJ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most traders, hedge funds are assumed to be worthless, old financial vehicles of yesteryear. While there are greater than 8000 funds trading today, We hone in on the elite of this group, around 850 funds. Most estimates calculate that this group of people have their hands on the majority of all hedge funds’ total asset base, and by tracking their finest stock picks, Insider Monkey has unsheathed numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to analyze the recent hedge fund action encompassing Yunji Inc. (NASDAQ:YJ).

Do Hedge Funds Think YJ Is A Good Stock To Buy Now?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in YJ over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Renaissance Technologies has the most valuable position in Yunji Inc. (NASDAQ:YJ), worth close to $0.2 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to Yunji Inc. (NASDAQ:YJ), around 0.0002% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 0 percent of its 13F equity portfolio to YJ.

Because Yunji Inc. (NASDAQ:YJ) has witnessed bearish sentiment from the smart money, logic holds that there exists a select few funds that elected to cut their positions entirely by the end of the first quarter. Interestingly, Jonathan Guo’s Yiheng Capital sold off the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $0 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Yunji Inc. (NASDAQ:YJ) but similarly valued. We will take a look at Seneca Foods Corp. (NASDAQ:SENEB), VOXX International Corp (NASDAQ:VOXX), Bridgewater Bancshares, Inc. (NASDAQ:BWB), Arcimoto, Inc. (NASDAQ:FUV), DURECT Corporation (NASDAQ:DRRX), Yellow Corporation (NASDAQ:YELL), and Eagle Bulk Shipping Inc. (NASDAQ:EGLE). This group of stocks’ market caps are closest to YJ’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $0 million in YJ’s case. Yellow Corporation (NASDAQ:YELL) is the most popular stock in this table. On the other hand Seneca Foods Corp. (NASDAQ:SENEB) is the least popular one with only 2 bullish hedge fund positions. Yunji Inc. (NASDAQ:YJ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for YJ is 22.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately YJ wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); YJ investors were disappointed as the stock returned -15.3% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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