Hedge Funds Were Selling Yandex NV (YNDX) Before The Coronavirus

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (read our latest 10 coronavirus predictions).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With this in mind let’s see whether Yandex NV (NASDAQ:YNDX) makes for a good investment at the moment. We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Yandex NV (NASDAQ:YNDX) was in 38 hedge funds’ portfolios at the end of the fourth quarter of 2019. YNDX has seen a decrease in enthusiasm from smart money of late. There were 39 hedge funds in our database with YNDX holdings at the end of the previous quarter. Our calculations also showed that YNDX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).

In today’s marketplace there are dozens of indicators stock market investors use to evaluate their stock investments. A duo of the less utilized indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can trounce the market by a significant amount (see the details here).

Scott Ferguson Sachem Head Capital

We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the new hedge fund action encompassing Yandex NV (NASDAQ:YNDX).

How are hedge funds trading Yandex NV (NASDAQ:YNDX)?

At Q4’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards YNDX over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Yandex NV (NASDAQ:YNDX) was held by Egerton Capital Limited, which reported holding $396 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $132.8 million position. Other investors bullish on the company included Two Sigma Advisors, GQG Partners, and Sachem Head Capital. In terms of the portfolio weights assigned to each position Solel Partners allocated the biggest weight to Yandex NV (NASDAQ:YNDX), around 19.51% of its 13F portfolio. Kora Management is also relatively very bullish on the stock, earmarking 13.25 percent of its 13F equity portfolio to YNDX.

Since Yandex NV (NASDAQ:YNDX) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of funds who sold off their entire stakes by the end of the third quarter. Intriguingly, Glen Kacher’s Light Street Capital dropped the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $71.8 million in stock. Howard Marks’s fund, Oaktree Capital Management, also dropped its stock, about $17.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Yandex NV (NASDAQ:YNDX). We will take a look at NetApp Inc. (NASDAQ:NTAP), Xylem Inc (NYSE:XYL), Broadridge Financial Solutions, Inc. (NYSE:BR), and NVR, Inc. (NYSE:NVR). This group of stocks’ market values match YNDX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTAP 27 687495 1
XYL 21 555354 1
BR 35 343414 4
NVR 30 1060404 -8
Average 28.25 661667 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $662 million. That figure was $1168 million in YNDX’s case. Broadridge Financial Solutions, Inc. (NYSE:BR) is the most popular stock in this table. On the other hand Xylem Inc (NYSE:XYL) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Yandex NV (NASDAQ:YNDX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th and still beat the market by 3.2 percentage points. Unfortunately YNDX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on YNDX were disappointed as the stock returned -29.2% during the first two and a half months of 2020 (through March 16th) 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 most of these stocks already outperformed the market in Q1.

5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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