Hedge Funds Are Crazy About KE Holdings Inc (BEKE)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards KE Holdings Inc (NYSE:BEKE) changed recently.

KE Holdings Inc (NYSE:BEKE) shareholders have witnessed an increase in hedge fund interest of late. KE Holdings Inc (NYSE:BEKE) was in 33 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BEKE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most shareholders, hedge funds are viewed as underperforming, old financial tools of yesteryear. While there are more than 8000 funds with their doors open today, Our researchers look at the top tier of this club, around 850 funds. These investment experts shepherd most of the smart money’s total asset base, and by keeping an eye on their best equity investments, Insider Monkey has found a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun 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 .

Alex Sacerdote of Whale Rock Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 let’s go over the new hedge fund action encompassing KE Holdings Inc (NYSE:BEKE).

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

At Q1’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the fourth quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in BEKE a year ago. So, let’s examine 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, ARK Investment Management, managed by Catherine D. Wood, holds the largest position in KE Holdings Inc (NYSE:BEKE). ARK Investment Management has a $546.6 million position in the stock, comprising 1.1% of its 13F portfolio. Sitting at the No. 2 spot is Tybourne Capital Management, led by Eashwar Krishnan, holding a $363.9 million position; 8% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions comprise Alex Sacerdote’s Whale Rock Capital Management, Lei Zhang’s Hillhouse Capital Management and Daniel Sundheim’s D1 Capital Partners. In terms of the portfolio weights assigned to each position Tybourne Capital Management allocated the biggest weight to KE Holdings Inc (NYSE:BEKE), around 7.99% of its 13F portfolio. Himension Capital is also relatively very bullish on the stock, earmarking 7.84 percent of its 13F equity portfolio to BEKE.

With a general bullishness amongst the heavyweights, key money managers have jumped into KE Holdings Inc (NYSE:BEKE) headfirst. Segantii Capital, managed by Simon Sadler, assembled the most outsized position in KE Holdings Inc (NYSE:BEKE). Segantii Capital had $73.3 million invested in the company at the end of the quarter. Ted Kang’s Kylin Management also initiated a $23 million position during the quarter. The other funds with new positions in the stock are Joseph Samuels’s Islet Management, Matthew Hulsizer’s PEAK6 Capital Management, and D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks similar to KE Holdings Inc (NYSE:BEKE). We will take a look at Dell Technologies Inc. (NYSE:DELL), Brookfield Asset Management Inc. (NYSE:BAM), Westpac Banking Corporation (NYSE:WBK), Colgate-Palmolive Company (NYSE:CL), The Sherwin-Williams Company (NYSE:SHW), The Southern Company (NYSE:SO), and Snowflake Inc (NYSE:SNOW). This group of stocks’ market valuations are similar to BEKE’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DELL 54 4834607 4
BAM 34 1388352 -4
WBK 3 35365 0
CL 48 2304590 2
SHW 51 2016614 2
SO 35 464056 3
SNOW 71 12965065 17
Average 42.3 3429807 3.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.3 hedge funds with bullish positions and the average amount invested in these stocks was $3430 million. That figure was $2309 million in BEKE’s case. Snowflake Inc (NYSE:SNOW) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 3 bullish hedge fund positions. KE Holdings Inc (NYSE:BEKE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BEKE is 60.1. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately BEKE wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BEKE investors were disappointed as the stock returned -17.8% since the end of March (through 7/2) 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.