Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is GDS Holdings Limited (NASDAQ:GDS) worth your attention right now? Money managers are in a bullish mood. The number of bullish hedge fund bets improved by 7 lately. Our calculations also showed that gds isn’t among the 30 most popular stocks among hedge funds. GDS was in 26 hedge funds’ portfolios at the end of the third quarter of 2018. There were 19 hedge funds in our database with GDS holdings at the end of the previous quarter.
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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a gander at the new hedge fund action surrounding GDS Holdings Limited (NASDAQ:GDS).
What have hedge funds been doing with GDS Holdings Limited (NASDAQ:GDS)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 37% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GDS over the last 13 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, 12 West Capital Management held the most valuable stake in GDS Holdings Limited (NASDAQ:GDS), which was worth $330 million at the end of the third quarter. On the second spot was Moore Global Investments which amassed $92.6 million worth of shares. Moreover, Calixto Global Investors, Tourbillon Capital Partners, and Point72 Asset Management were also bullish on GDS Holdings Limited (NASDAQ:GDS), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds have been driving this bullishness. Tekne Capital Management, managed by Beeneet Kothari, created the most outsized position in GDS Holdings Limited (NASDAQ:GDS). Tekne Capital Management had $24 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $16.9 million investment in the stock during the quarter. The other funds with brand new GDS positions are Sander Gerber’s Hudson Bay Capital Management, Joel Ramin’s 12 West Capital Management, and Charles Clough’s Clough Capital Partners.
Let’s check out hedge fund activity in other stocks similar to GDS Holdings Limited (NASDAQ:GDS). These stocks are On ASGN Incorporated (NYSE:ASGN), Vipshop Holdings Limited (NYSE:VIPS), Evercore Inc. (NYSE:EVR), and F.N.B. Corp (NYSE:FNB). All of these stocks’ market caps are similar to GDS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASGN | 18 | 70864 | 4 |
| VIPS | 22 | 130110 | -5 |
| EVR | 22 | 273405 | 0 |
| FNB | 12 | 52228 | 0 |
| Average | 18.5 | 131652 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $671 million in GDS’s case. Vipshop Holdings Limited (NYSE:VIPS) is the most popular stock in this table. On the other hand F.N.B. Corp (NYSE:FNB) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks GDS Holdings Limited (NASDAQ:GDS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.