Hedge Funds Are Dumping Fang Holdings Ltd (SFUN)

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Fang Holdings Ltd (NYSE:SFUN) worth your attention right now? Hedge funds are indeed actually turning less bullish. The number of long hedge fund investments were cut by 1 lately. SFUN was in 11 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with SFUN positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sanmina Corp (NASDAQ:SANM), Taylor Morrison Home Corp (NYSE:TMHC), and Neogen Corporation (NASDAQ:NEOG) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, we’re going to take a gander at the new action regarding Fang Holdings Ltd (NYSE:SFUN).

How are hedge funds trading SouFun Holdings Limited (ADR) (NYSE:SFUN)?

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in SFUN over the last 5 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, OZ Management, led by Daniel S. Och, holds the most valuable position in Fang Holdings Ltd (NYSE:SFUN). OZ Management has a $61.7 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Lei Zhang of Hillhouse Capital Management, with a $6.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Millennium Management, one of the biggest hedge funds in the world, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since Fang Holdings Ltd (NYSE:SFUN) has weathered a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few hedgies that elected to cut their entire stakes by the end of the third quarter. It’s worth mentioning that Kerr Neilson’s Platinum Asset Management dumped the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling close to $57.4 million in stock. Daniel S. Och’s fund, OZ Management, also dropped its call options, about $12.6 million worth.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Fang Holdings Ltd (NYSE:SFUN) but similarly valued. These stocks are Sanmina Corp (NASDAQ:SANM), Taylor Morrison Home Corp (NYSE:TMHC), Neogen Corporation (NASDAQ:NEOG), and Moog Inc (NYSE:MOG). This group of stocks’ market valuations are similar to SFUN’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $80 million in SFUN’s case. Sanmina Corp (NASDAQ:SANM) is the most popular stock in this table. On the other hand Taylor Morrison Home Corp (NYSE:TMHC) is the least popular one with only 9 bullish hedge fund positions. Fang Holdings Ltd (NYSE:SFUN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SANM might be a better candidate to consider taking a long position in.

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Disclosure: None