The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought 58.com Inc (NYSE:WUBA) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
58.com Inc (NYSE:WUBA) was in 34 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. WUBA has seen an increase in activity from the world’s largest hedge funds recently. There were 21 hedge funds in our database with WUBA positions at the end of the first quarter. Our calculations also showed that WUBA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are over 8000 funds in operation at the moment, We choose to focus on the moguls of this club, about 850 funds. These investment experts orchestrate the majority of the smart money’s total asset base, and by monitoring their top stock picks, Insider Monkey has spotted several investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Ken Fisher of Fisher Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to analyze the key hedge fund action encompassing 58.com Inc (NYSE:WUBA).
How have hedgies been trading 58.com Inc (NYSE:WUBA)?
At the end of June, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 62% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WUBA over the last 20 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, Farallon Capital was the largest shareholder of 58.com Inc (NYSE:WUBA), with a stake worth $267.8 million reported as of the end of September. Trailing Farallon Capital was Pentwater Capital Management, which amassed a stake valued at $266.6 million. Alpine Associates, Renaissance Technologies, and Half Sky Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Athos Capital allocated the biggest weight to 58.com Inc (NYSE:WUBA), around 23.87% of its 13F portfolio. Half Sky Capital is also relatively very bullish on the stock, designating 21.75 percent of its 13F equity portfolio to WUBA.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Farallon Capital, initiated the largest position in 58.com Inc (NYSE:WUBA). Farallon Capital had $267.8 million invested in the company at the end of the quarter. Matthew Halbower’s Pentwater Capital Management also initiated a $266.6 million position during the quarter. The other funds with brand new WUBA positions are Robert Emil Zoellner’s Alpine Associates, Simon Sadler’s Segantii Capital, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as 58.com Inc (NYSE:WUBA) but similarly valued. We will take a look at Whirlpool Corporation (NYSE:WHR), Wynn Resorts, Limited (NASDAQ:WYNN), Guardant Health, Inc. (NASDAQ:GH), Graco Inc. (NYSE:GGG), LKQ Corporation (NASDAQ:LKQ), Entegris Inc (NASDAQ:ENTG), and NRG Energy Inc (NYSE:NRG). This group of stocks’ market valuations are similar to WUBA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WHR | 26 | 800208 | 1 |
| WYNN | 45 | 587255 | 5 |
| GH | 36 | 767641 | 9 |
| GGG | 32 | 204789 | 11 |
| LKQ | 44 | 1536917 | 3 |
| ENTG | 28 | 601485 | 9 |
| NRG | 36 | 1095466 | -2 |
| Average | 35.3 | 799109 | 5.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $799 million. That figure was $1204 million in WUBA’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Whirlpool Corporation (NYSE:WHR) is the least popular one with only 26 bullish hedge fund positions. 58.com Inc (NYSE:WUBA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WUBA is 61.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately WUBA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WUBA investors were disappointed as the stock returned 2.6% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow 58.Com Inc. (NYSE:WUBA)
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Disclosure: None. This article was originally published at Insider Monkey.
