Hedge Funds Have Never Been This Bullish On Bitauto Hldg Ltd (BITA)

In this article you are going to find out whether hedge funds think Bitauto Hldg Ltd (NYSE:BITA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Bitauto Hldg Ltd (NYSE:BITA) the right investment to pursue these days? Money managers are taking an optimistic view. The number of bullish hedge fund bets went up by 3 lately. Our calculations also showed that BITA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


James Dinan of York Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the latest hedge fund action surrounding Bitauto Hldg Ltd (NYSE:BITA).

How have hedgies been trading Bitauto Hldg Ltd (NYSE:BITA)?

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BITA over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BITA A Good Stock To Buy?

The largest stake in Bitauto Hldg Ltd (NYSE:BITA) was held by Maso Capital, which reported holding $42 million worth of stock at the end of September. It was followed by York Capital Management with a $15.4 million position. Other investors bullish on the company included Millennium Management, Pentwater Capital Management, and Oasis Management. In terms of the portfolio weights assigned to each position Maso Capital allocated the biggest weight to Bitauto Hldg Ltd (NYSE:BITA), around 10.87% of its 13F portfolio. Oasis Management is also relatively very bullish on the stock, setting aside 4.79 percent of its 13F equity portfolio to BITA.

As industrywide interest jumped, specific money managers have been driving this bullishness. Renaissance Technologies, initiated the most valuable position in Bitauto Hldg Ltd (NYSE:BITA). Renaissance Technologies had $0.2 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.1 million position during the quarter. The only other fund with a brand new BITA position is Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s check out hedge fund activity in other stocks similar to Bitauto Hldg Ltd (NYSE:BITA). We will take a look at Azure Power Global Limited (NYSE:AZRE), CNX Midstream Partners LP (NYSE:CNXM), Encore Capital Group, Inc. (NASDAQ:ECPG), and Neenah Inc. (NYSE:NP). This group of stocks’ market caps are closest to BITA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AZRE 4 10039 0
CNXM 2 7681 -3
ECPG 15 37246 2
NP 13 22734 2
Average 8.5 19425 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $99 million in BITA’s case. Encore Capital Group, Inc. (NASDAQ:ECPG) is the most popular stock in this table. On the other hand CNX Midstream Partners LP (NYSE:CNXM) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Bitauto Hldg Ltd (NYSE:BITA) is more popular among hedge funds. 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 returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on BITA as the stock returned 52.6% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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