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Hedge Funds Are Selling ZTO Express (Cayman) Inc. (ZTO)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of ZTO Express (Cayman) Inc. (NYSE:ZTO) based on that data.

Is ZTO Express (Cayman) Inc. (NYSE:ZTO) the right investment to pursue these days? Investors who are in the know are taking a pessimistic view. The number of bullish hedge fund bets decreased by 1 in recent months. Our calculations also showed that ZTO isn’t among the 30 most popular stocks among hedge funds (see the video below). ZTO was in 15 hedge funds’ portfolios at the end of June. There were 16 hedge funds in our database with ZTO positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are dozens of indicators stock market investors have at their disposal to evaluate their holdings. Two of the most under-the-radar indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outclass the S&P 500 by a healthy margin (see the details here).

ZTO_oct2019

Unlike this former hedge fund manager who is convinced Dow will soar past 40000 in a year or two, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a gander at the new hedge fund action encompassing ZTO Express (Cayman) Inc. (NYSE:ZTO).

What does smart money think about ZTO Express (Cayman) Inc. (NYSE:ZTO)?

At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ZTO over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Chase Coleman of Tiger Global

Chase Coleman of Tiger Global

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Platinum Asset Management, managed by Kerr Neilson, holds the number one position in ZTO Express (Cayman) Inc. (NYSE:ZTO). Platinum Asset Management has a $192 million position in the stock, comprising 4.5% of its 13F portfolio. The second largest stake is held by Tairen Capital, led by Larry Chen and Terry Zhang, holding a $60.2 million position; 11.6% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism contain Chase Coleman’s Tiger Global Management LLC, Cliff Asness’s AQR Capital Management and Jonathan Barrett and Paul Segal’s Luminus Management.

Because ZTO Express (Cayman) Inc. (NYSE:ZTO) has witnessed falling interest from the smart money, it’s safe to say that there exists a select few hedgies who sold off their entire stakes last quarter. It’s worth mentioning that Simon Sadler’s Segantii Capital sold off the largest position of all the hedgies watched by Insider Monkey, valued at about $21.6 million in stock. Jeffrey Talpins’s fund, Element Capital Management, also dropped its stock, about $19.2 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ZTO Express (Cayman) Inc. (NYSE:ZTO) but similarly valued. We will take a look at iQIYI, Inc. (NASDAQ:IQ), Magna International Inc. (NYSE:MGA), Markel Corporation (NYSE:MKL), and Teleflex Incorporated (NYSE:TFX). This group of stocks’ market valuations resemble ZTO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IQ 22 901265 0
MGA 14 257637 -13
MKL 25 1300425 2
TFX 25 880362 6
Average 21.5 834922 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $835 million. That figure was $326 million in ZTO’s case. Markel Corporation (NYSE:MKL) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 14 bullish hedge fund positions. ZTO Express (Cayman) Inc. (NYSE:ZTO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on ZTO as the stock returned 11.6% during the same time frame and outperformed the market by an even larger margin.

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

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