Hedge Funds Keep Buying Zai Lab Limited (ZLAB)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Zai Lab Limited (NASDAQ:ZLAB).

Zai Lab Limited (NASDAQ:ZLAB) has experienced an increase in activity from the world’s largest hedge funds lately. Zai Lab Limited (NASDAQ:ZLAB) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ZLAB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Henrik Rhenman of Rhenman & Partners Asset Management

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Do Hedge Funds Think ZLAB Is A Good Stock To Buy Now?

At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in ZLAB a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Among these funds, Rock Springs Capital Management held the most valuable stake in Zai Lab Limited (NASDAQ:ZLAB), which was worth $124.6 million at the end of the fourth quarter. On the second spot was Viking Global which amassed $99.1 million worth of shares. Hudson Bay Capital Management, Indus Capital, and Atika 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 0 allocated the biggest weight to Zai Lab Limited (NASDAQ:ZLAB), around 8.83% of its 13F portfolio. 0 is also relatively very bullish on the stock, setting aside 3.07 percent of its 13F equity portfolio to ZLAB.

Consequently, specific money managers were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, initiated the biggest position in Zai Lab Limited (NASDAQ:ZLAB). Viking Global had $99.1 million invested in the company at the end of the quarter. Renaissance Technologies also made a $10.8 million investment in the stock during the quarter. The following funds were also among the new ZLAB investors: Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund, Henrik Rhenman’s Rhenman & Partners Asset Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s check out hedge fund activity in other stocks similar to Zai Lab Limited (NASDAQ:ZLAB). We will take a look at DaVita Inc (NYSE:DVA), Autohome Inc (NYSE:ATHM), Lennox International Inc. (NYSE:LII), Vail Resorts, Inc. (NYSE:MTN), China Eastern Airlines Corp. Ltd. (NYSE:CEA), FactSet Research Systems Inc. (NYSE:FDS), and Brookfield Renewable Partners L.P. (NYSE:BEP). This group of stocks’ market caps resemble ZLAB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DVA 34 4398979 2
ATHM 18 588993 2
LII 25 395757 -2
MTN 36 1091529 5
CEA 3 2009 2
FDS 30 355190 0
BEP 24 223248 4
Average 24.3 1007958 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $1008 million. That figure was $666 million in ZLAB’s case. Vail Resorts, Inc. (NYSE:MTN) is the most popular stock in this table. On the other hand China Eastern Airlines Corp. Ltd. (NYSE:CEA) is the least popular one with only 3 bullish hedge fund positions. Zai Lab Limited (NASDAQ:ZLAB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZLAB is 80.9. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on ZLAB as the stock returned 31.8% since the end of Q1 (through 7/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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