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Hedge Funds Have Never Been This Bullish On Bilibili Inc. (BILI)

Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Bilibili Inc. (NASDAQ:BILI).

Is Bilibili Inc. (NASDAQ:BILI) a cheap investment now? Hedge funds are in an optimistic mood. The number of bullish hedge fund bets inched up by 2 in recent months. Our calculations also showed that BILI isn’t among the 30 most popular stocks among hedge funds. BILI was in 22 hedge funds’ portfolios at the end of the first quarter of 2019. There were 20 hedge funds in our database with BILI positions at the end of the previous quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

YORK CAPITAL MANAGEMENT

We’re going to check out the recent hedge fund action encompassing Bilibili Inc. (NASDAQ:BILI).

What have hedge funds been doing with Bilibili Inc. (NASDAQ:BILI)?

At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BILI over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

BILI_jun2019

Among these funds, D1 Capital Partners held the most valuable stake in Bilibili Inc. (NASDAQ:BILI), which was worth $108 million at the end of the first quarter. On the second spot was Segantii Capital which amassed $90.6 million worth of shares. Moreover, Yiheng Capital, Jericho Capital Asset Management, and Alkeon Capital Management were also bullish on Bilibili Inc. (NASDAQ:BILI), allocating a large percentage of their portfolios to this stock.

As one would reasonably expect, specific money managers have jumped into Bilibili Inc. (NASDAQ:BILI) headfirst. Segantii Capital, managed by Simon Sadler, established the most outsized position in Bilibili Inc. (NASDAQ:BILI). Segantii Capital had $90.6 million invested in the company at the end of the quarter. Panayotis Takis Sparaggis’s Alkeon Capital Management also made a $31.3 million investment in the stock during the quarter. The other funds with new positions in the stock are James Dinan’s York Capital Management, Jim Simons’s Renaissance Technologies, and Michael Gelband’s ExodusPoint Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Bilibili Inc. (NASDAQ:BILI). These stocks are Oshkosh Corporation (NYSE:OSK), National Fuel Gas Company (NYSE:NFG), Huntsman Corporation (NYSE:HUN), and NIO Inc. (NYSE:NIO). This group of stocks’ market caps resemble BILI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OSK 24 353710 -5
NFG 16 236763 0
HUN 35 470004 9
NIO 21 215822 8
Average 24 319075 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $319 million. That figure was $449 million in BILI’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand National Fuel Gas Company (NYSE:NFG) is the least popular one with only 16 bullish hedge fund positions. Bilibili Inc. (NASDAQ:BILI) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately BILI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BILI investors were disappointed as the stock returned -19.8% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.

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

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