Here is How Hedge Funds Traded MOGU Inc. (MOGU) During The Crash

In this article we will take a look at whether hedge funds think MOGU Inc. (NYSE:MOGU) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

MOGU Inc. (NYSE:MOGU) was in 3 hedge funds’ portfolios at the end of March. MOGU investors should pay attention to an increase in support from the world’s most elite money managers of late. There were 2 hedge funds in our database with MOGU positions at the end of the previous quarter. Our calculations also showed that MOGU 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 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.

Lei Zhang Hillhouse Capital

Lei Zhang of Hillhouse Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the key hedge fund action surrounding MOGU Inc. (NYSE:MOGU).

What does smart money think about MOGU Inc. (NYSE:MOGU)?

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. By comparison, 1 hedge funds held shares or bullish call options in MOGU a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Hillhouse Capital Management held the most valuable stake in MOGU Inc. (NYSE:MOGU), which was worth $12 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $0 million worth of shares. Citadel Investment Group was 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 Hillhouse Capital Management allocated the biggest weight to MOGU Inc. (NYSE:MOGU), around 0.16% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0 percent of its 13F equity portfolio to MOGU.

Now, key money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in MOGU Inc. (NYSE:MOGU). Citadel Investment Group had $0 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as MOGU Inc. (NYSE:MOGU) but similarly valued. We will take a look at Apyx Medical Corporation (NASDAQ:APYX), CyberOptics Corporation (NASDAQ:CYBE), Sequans Communications SA (NYSE:SQNS), and NeuBase Therapeutics, Inc. (NASDAQ:NBSE). All of these stocks’ market caps resemble MOGU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APYX 9 18070 -1
CYBE 7 14209 1
SQNS 5 20535 1
NBSE 5 16563 -1
Average 6.5 17344 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $12 million in MOGU’s case. Apyx Medical Corporation (NASDAQ:APYX) is the most popular stock in this table. On the other hand Sequans Communications SA (NYSE:SQNS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks MOGU Inc. (NYSE:MOGU) is even less popular than SQNS. Hedge funds dodged a bullet by taking a bearish stance towards MOGU. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately MOGU wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); MOGU investors were disappointed as the stock returned -3.9% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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