Hedge Funds Are Dumping NIO Inc. (NIO)

Is NIO Inc. (NYSE:NIO) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is NIO Inc. (NYSE:NIO) a buy right now? Prominent investors were cutting their exposure. The number of bullish hedge fund positions retreated by 6 in recent months. NIO Inc. (NYSE:NIO) was in 28 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that NIO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Today there are a large number of tools stock traders can use to value their holdings. A pair of the best tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outclass the S&P 500 by a healthy amount (see the details here). 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 .

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

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 let’s check out the latest hedge fund action regarding NIO Inc. (NYSE:NIO).

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

Heading into the second quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in NIO a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is NIO A Good Stock To Buy?

Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the number one position in NIO Inc. (NYSE:NIO). D E Shaw has a $443.9 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $265.7 million call position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish contain Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Long Corridor Asset Management allocated the biggest weight to NIO Inc. (NYSE:NIO), around 28.16% of its 13F portfolio. Ovata Capital Management is also relatively very bullish on the stock, dishing out 14.24 percent of its 13F equity portfolio to NIO.

Because NIO Inc. (NYSE:NIO) has faced bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of money managers that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dumped the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling close to $897.2 million in stock, and Kenneth Tropin’s Graham Capital Management was right behind this move, as the fund said goodbye to about $275.7 million worth. These moves are interesting, as total hedge fund interest dropped by 6 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NIO Inc. (NYSE:NIO) but similarly valued. We will take a look at Equinix Inc (NASDAQ:EQIX), Workday Inc (NYSE:WDAY), Global Payments Inc (NYSE:GPN), Banco Santander, S.A. (NYSE:SAN), Capital One Financial Corp. (NYSE:COF), Twilio Inc. (NYSE:TWLO), and Takeda Pharmaceutical Company Limited (NYSE:TAK). This group of stocks’ market values are closest to NIO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EQIX 41 1546339 -1
WDAY 69 5179677 -11
GPN 62 4558094 7
SAN 15 490548 1
COF 59 3139814 3
TWLO 99 5812460 5
TAK 19 860444 1
Average 52 3083911 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 52 hedge funds with bullish positions and the average amount invested in these stocks was $3084 million. That figure was $1321 million in NIO’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 15 bullish hedge fund positions. NIO Inc. (NYSE:NIO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NIO is 30.7. 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. 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 beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on NIO, though not to the same extent, as the stock returned 16.8% since the end of Q1 (through July 9th) and outperformed the market.

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