Hedge Funds Are Crazy About Futu Holdings Limited (FUTU)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Futu Holdings Limited (NASDAQ:FUTU).

Is Futu Holdings Limited (NASDAQ:FUTU) a good stock to buy now? The smart money was becoming more confident. The number of bullish hedge fund bets inched up by 9 recently. Futu Holdings Limited (NASDAQ:FUTU) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FUTU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 17 hedge funds in our database with FUTU holdings at the end of December.

If you’d ask most investors, hedge funds are viewed as slow, outdated investment tools of years past. While there are over 8000 funds trading at the moment, We choose to focus on the leaders of this club, around 850 funds. Most estimates calculate that this group of people handle the lion’s share of all hedge funds’ total asset base, and by watching their highest performing investments, Insider Monkey has brought to light a few investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year 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 .

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. 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. Keeping this in mind we’re going to view the latest hedge fund action regarding Futu Holdings Limited (NASDAQ:FUTU).

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

At first quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 53% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FUTU over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Tiger Global Management LLC was the largest shareholder of Futu Holdings Limited (NASDAQ:FUTU), with a stake worth $530.5 million reported as of the end of March. Trailing Tiger Global Management LLC was Citadel Investment Group, which amassed a stake valued at $134.1 million. Sylebra Capital Management, Think Investments, and IvyRock Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position IvyRock Asset Management allocated the biggest weight to Futu Holdings Limited (NASDAQ:FUTU), around 43.43% of its 13F portfolio. Think Investments is also relatively very bullish on the stock, designating 12.84 percent of its 13F equity portfolio to FUTU.

Now, specific money managers were breaking ground themselves. Tiger Global Management LLC, managed by Chase Coleman, initiated the largest position in Futu Holdings Limited (NASDAQ:FUTU). Tiger Global Management LLC had $530.5 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also initiated a $41.2 million position during the quarter. The following funds were also among the new FUTU investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Imran Khan’s Proem Advisors, and Leung Chi Kit’s Kadensa Capital.

Let’s go over hedge fund activity in other stocks similar to Futu Holdings Limited (NASDAQ:FUTU). We will take a look at Genmab A/S (NASDAQ:GMAB), Church & Dwight Co., Inc. (NYSE:CHD), International Paper Company (NYSE:IP), CNH Industrial NV (NYSE:CNHI), Plug Power, Inc. (NASDAQ:PLUG), XP Inc. (NASDAQ:XP), and HubSpot Inc (NYSE:HUBS). This group of stocks’ market caps are similar to FUTU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GMAB 13 113947 -3
CHD 27 1136541 -11
IP 36 259964 5
CNHI 23 739950 7
PLUG 25 612662 4
XP 23 480268 -6
HUBS 46 1738961 -6
Average 27.6 726042 -1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $726 million. That figure was $1015 million in FUTU’s case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 13 bullish hedge fund positions. Futu Holdings Limited (NASDAQ:FUTU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FUTU is 59.7. 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately FUTU wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FUTU investors were disappointed as the stock returned -12% since the end of March (through 7/9) 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.

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