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

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards HUYA Inc. (NYSE:HUYA).

Is HUYA Inc. (NYSE:HUYA) undervalued? Hedge funds are turning bullish. The number of bullish hedge fund positions improved by 5 in recent months. Our calculations also showed that huya isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Kerr Neilson

We’re going to take a peek at the new hedge fund action encompassing HUYA Inc. (NYSE:HUYA).

How have hedgies been trading HUYA Inc. (NYSE:HUYA)?

At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in HUYA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

No of Hedge Funds with HUYA Positions

Among these funds, Sylebra Capital Management held the most valuable stake in HUYA Inc. (NYSE:HUYA), which was worth $79.8 million at the end of the first quarter. On the second spot was Alkeon Capital Management which amassed $74.4 million worth of shares. Moreover, Jericho Capital Asset Management, Driehaus Capital, and Platinum Asset Management were also bullish on HUYA Inc. (NYSE:HUYA), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, some big names have jumped into HUYA Inc. (NYSE:HUYA) headfirst. Driehaus Capital, managed by Richard Driehaus, assembled the most valuable position in HUYA Inc. (NYSE:HUYA). Driehaus Capital had $28.8 million invested in the company at the end of the quarter. Kerr Neilson’s Platinum Asset Management also made a $20.4 million investment in the stock during the quarter. The other funds with brand new HUYA positions are Tim David’s Guardian Point Capital, David Halpert’s Prince Street Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now review hedge fund activity in other stocks similar to HUYA Inc. (NYSE:HUYA). We will take a look at Brookfield Renewable Partners L.P. (NYSE:BEP), Elastic N.V. (NYSE:ESTC), Alkermes Plc (NASDAQ:ALKS), and James Hardie Industries plc (NYSE:JHX). This group of stocks’ market valuations resemble HUYA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BEP 3 2816 0
ESTC 18 161603 -3
ALKS 22 309347 3
JHX 2 4238 0
Average 11.25 119501 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $308 million in HUYA’s case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 2 bullish hedge fund positions. HUYA Inc. (NYSE:HUYA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately HUYA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HUYA were disappointed as the stock returned -22.3% during the same 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.