Five ADRs To Buy Now

American Depositary Receipt (ADR) is a certificate issued by a U.S. bank that represents a specified number of shares of a foreign stock that is traded on a U.S. stock exchange. These receipts were introduced to reduce the expenses associated with listing a foreign stock on a U.S. exchange and to help investors manage their foreign investments in U.S. dollars. In this article we’ll take a look at some of the most popular ADRs among top hedge funds.

An everyday investor doesn’t have the same resources and capabilities to analyze different publicly-traded companies as hedge funds do. This is why it is a good idea to see what stocks hedge funds like the most and try to imitate some of their bullish moves in an attempt to reap market-beating returns. At Insider Monkey, we follow the activity of several hundred of the best-performing hedge funds as part of our strategy. We analyze their 13F filings and use the data to see what stocks they are collectively bullish on. Through extensive research, we have determined that the best approach to outperform the broader indices is to follow hedge funds into their top small-cap ideas (see more details here).

At the end of the 2015, roughly 39% of JD.Com Inc (ADR) (NASDAQ:JD) common stock was held by 78 elite hedge funds from our database, up from 71 a quarter earlier. Tiger cub Chase Coleman is bullish on this stock and his fund, Tiger Global Management, held 59.6 million shares of JD.Com Inc (ADR) (NASDAQ:JD) at the end of December, its third-largest position, worth roughly $1.92 billion. Stephen Mandel‘s Lone Pine Capital, on the other hand, chose to distance from the stock and has reduced its holding by 38% to 26.9 million shares. JD.Com Inc (ADR) (NASDAQ:JD) has been slowly closing the gap on Alibaba Group Holding Ltd (NYSE:BABA) in their battle for the Chinese online shopping market. However, that came at a cost and, with expenses continuing to pile up, analysts have recently reduced their earnings estimates. According to a report by Bloomberg, analysts’ average profit forecast for 2016 has dropped to $0.34 per share from previous estimates of $0.78 per share.

Hedge fund sentiment towards Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) improved significantly during the fourth quarter, with the number of funds withlong positions surging to 61 at the end of December from 43 at the end of September. Billionaire Ken Fisher is very bullish on this stock, having more than doubled his holding by the end of December. According to its latest 13F filing, Fisher Asset Management holds 8.84 million shares of Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) valued at $409 million. Daniel S. Och is also optimistic about the prospects of the company and has increased his stake to 7.94 million shares. Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) has recently posted fourth quarter financial results, reporting a 50% year-over-year increase in revenues to $440 million and a profit of $0.11 per share. The company’s forward guidance was unexpectedly weak and analysts at Oppenheimer have reduced their price target to $55 per share from $60 per share, but have maintained their Outperform rating. This represents a 26% premium over Friday’s closing price of $43.52 per share.

Head over to the next page to find out more about three other ARDs hedge fund managers are betting on.

According to data compiled by Insider Monkey, Baidu Inc (ADR) (NASDAQ:BIDU)‘s popularity among top hedge funds has slightly increased over the quarter, with 55 of them having reported a stake in the company, up from 52 a quarter before. The Chinese tech giant has joined the race for driver-less cars and is expecting to launch a commercially viable model by 2018. Since Baidu Inc (ADR) (NASDAQ:BIDU) is a technology company, it is probably more interested in becoming a key provider of the software used by driverless cars, rather than building the actual cars. Jonathan Auerbach, the manager of Hound Partners, thought it was a good time to buy Baidu Inc (ADR) (NASDAQ:BIDU) and has initiated a position that amassed 1.07 million shares at the end of the quarter. William Von Mueffling’s Cantillon Capital Management is also bullish and has slightly increased its investment to 2.23 million shares worth $421 million at the end of 2015.

Hedge fund interest in Shire PLC (ADR) (NASDAQ:SHPG) has cooled down a bit during the previous quarter, as the total number of long positions fell to 40 at the end of 2015 from 43 at the end of September. Still, hedge funds have a significant presence, as together they control 25% of the company’s outstanding shares. Billionaire John Paulson is betting big on Shire PLC (ADR) (NASDAQ:SHPG), having invested roughly 8% of Paulson & Co’s equity portfolio in this stock. According to its latest 13F filing, Paulson holds 6.84 million shares valued at more than $1.4 billion. The stock is currently trading at a trailing Price-to-Earnings (P/E) ratio of 25 and is paying an annual dividend of $0.79 per share, which offers a yield of 0.5%. Having ended 2015 down by 2.6%, the stock continued its slide into 2016 and is currently down by roughly 20% for the year.

The status of NetEase Inc (ADR) (NASDAQ:NTES) has remained roughly the same over the past quarter, with the number of hedge funds invested in the stock having inched down to 25, whereas at the end of the third quarter 26 of them owned a position. William B. Gray’s Orbis Investment Management held the largest stake in NetEase Inc (ADR) (NASDAQ:NTES) among the hedge funds followed by Insider Monkey, having reported ownership of 10.2 million shares worth $1.85 billion in its latest 13F filing. Rob Citrone’s Discovery Capital Management decided to reduce its exposure to this stock, having dumped nearly half of its position over the quarter and reportedly holds 1.11 million shares valued at $201 million. NetEase Inc (ADR) (NASDAQ:NTES) has a market cap of $19.5 billion and pays an annual dividend of $2.03 per share, providing investors with a yield of 1.4%. The stock is currently trading at a trailing P/E ratio of 19, significantly lower than the industry average of 333.6, according to Yahoo Finance.

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