Hedge Funds Are Dumping Qutoutiao Inc. (QTT)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Qutoutiao Inc. (NASDAQ:QTT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Qutoutiao Inc. (NASDAQ:QTT) going to take off soon? Investors who are in the know are in a pessimistic mood. The number of long hedge fund positions shrunk by 2 lately. Our calculations also showed that QTT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are many gauges market participants can use to grade stocks. A duo of the most useful gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outpace the market by a healthy margin (see the details here).

Daniel Sundheim D1 Capital

Daniel Sundheim of D1 Capital Partners

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to check out the key hedge fund action surrounding Qutoutiao Inc. (NASDAQ:QTT).

What does smart money think about Qutoutiao Inc. (NASDAQ:QTT)?

At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in QTT over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Daniel Sundheim’s D1 Capital Partners has the number one position in Qutoutiao Inc. (NASDAQ:QTT), worth close to $9.3 million, amounting to 0.1% of its total 13F portfolio. On D1 Capital Partners’s heels is Ben Levine, Andrew Manuel and Stefan Renold of LMR Partners, with a $1.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass Minhua Zhang’s Weld Capital Management, Steve Cohen’s Point72 Asset Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Qutoutiao Inc. (NASDAQ:QTT), around 0.2% of its 13F portfolio. D1 Capital Partners is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to QTT.

Because Qutoutiao Inc. (NASDAQ:QTT) has faced falling interest from the smart money, it’s safe to say that there were a few fund managers that decided to sell off their positions entirely by the end of the third quarter. It’s worth mentioning that David E. Shaw’s D E Shaw dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $1.4 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also sold off its stock, about $0.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Qutoutiao Inc. (NASDAQ:QTT). These stocks are Piper Jaffray Companies (NYSE:PJC), Teekay LNG Partners L.P. (NYSE:TGP), Franks International NV (NYSE:FI), and First Bancorp (NASDAQ:FBNC). This group of stocks’ market caps are closest to QTT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PJC 9 49369 0
TGP 10 43552 1
FI 11 22572 -4
FBNC 15 84801 1
Average 11.25 50074 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $13 million in QTT’s case. First Bancorp (NASDAQ:FBNC) is the most popular stock in this table. On the other hand Piper Jaffray Companies (NYSE:PJC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Qutoutiao Inc. (NASDAQ:QTT) is even less popular than PJC. Hedge funds dodged a bullet by taking a bearish stance towards QTT. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately QTT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); QTT investors were disappointed as the stock returned -20.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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