Hedge Funds’ Big September Winners As Monthly Winning Streak Rises

The smart money is back. After rallying 1.3% in August, the HFRI Equity Hedge Index, which tracks the performance of many top equity hedge funds, advanced by 1.5% in September.

In this article, we examine some of the smart money’s favorite stocks, Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Delta Air Lines, Inc. (NYSE:DAL), Paypal Holdings Inc (NASDAQ:PYPL), and Alibaba Group Holding Ltd (NYSE:BABA), that helped the group of investors to collectively achieve the strong results (and beat the market during the time frame too).

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details here).

Alibaba Group Holding Ltd (NYSE:BABA), sign on a building, logo, share, stock, New York, offering

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#5 Alibaba Group Holding Ltd (NYSE:BABA)

– Number of Hedge Fund Holders (as of June 30): 69
– Total Value of Hedge Fund Holdings (as of June 30): $5.52 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 2.80%

What a difference eight months can make. In February, many investors didn’t like Alibaba Group Holding Ltd (NYSE:BABA) due to its perceived growth rate troubles and the weak Chinese economy. Now, due to more optimism in the Chinese internet sector and several solid earnings reports, Alibaba shares are in the triple digits and are trading close to their 52-week high. Alibaba’s strong performance in September, during which the stock rallied to $105.79 from $97.19 per share, also helped the performance of investors, which include 69 funds from our database. Andreas Halvorsen’s Viking Global was one fund that held over 3.2 million shares of Alibaba Group Holding Ltd (NYSE:BABA) at the end of June.

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#4 Paypal Holdings Inc (NASDAQ:PYPL)

– Number of Hedge Fund Holders (as of June 30): 84
– Total Value of Hedge Fund Holdings (as of June 30): $5.43 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 12.30%

Who says that spin-offs can’t deliver any value anymore? Paypal Holdings Inc (NASDAQ:PYPL)’s shares surged 10% in September. According to our data, 84 funds that we track, including Carl Icahn’s Icahn Capital LP, held shares in the online finance giant at the end of June. With fintech still in its infancy, PayPal has considerable growth and acquisition opportunities ahead. Analysts have an average price target of $44.26 per share, giving the stock another 10% upside from current levels.

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