We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of 58.com Inc (NYSE:WUBA) based on that data.
Hedge fund interest in 58.com Inc (NYSE:WUBA) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare WUBA to other stocks including ICON Public Limited Company (NASDAQ:ICLR), Ares Management Corporation (NYSE:ARES), and Bio-Techne Corporation (NASDAQ:TECH) to get a better sense of its popularity.
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To most shareholders, hedge funds are perceived as slow, outdated investment tools of the past. While there are more than 8000 funds in operation at present, Our experts hone in on the moguls of this group, around 850 funds. These hedge fund managers preside over the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their unrivaled investments, Insider Monkey has discovered many investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. Keeping this in mind we’re going to check out the new hedge fund action encompassing 58.com Inc (NYSE:WUBA).
How are hedge funds trading 58.com Inc (NYSE:WUBA)?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in WUBA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Platinum Asset Management was the largest shareholder of 58.com Inc (NYSE:WUBA), with a stake worth $93.9 million reported as of the end of September. Trailing Platinum Asset Management was GMT Capital, which amassed a stake valued at $47 million. Lakewood Capital Management, First Pacific Advisors LLC, and Renaissance Technologies 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 Half Sky Capital allocated the biggest weight to 58.com Inc (NYSE:WUBA), around 9.27% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, designating 3.73 percent of its 13F equity portfolio to WUBA.
Because 58.com Inc (NYSE:WUBA) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedgies who sold off their entire stakes heading into Q4. Intriguingly, Nitin Saigal and Dan Jacobs’s Kora Management said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, comprising about $33.3 million in stock. Josh Resnick’s fund, Jericho Capital Asset Management, also sold off its stock, about $21.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as 58.com Inc (NYSE:WUBA) but similarly valued. We will take a look at ICON Public Limited Company (NASDAQ:ICLR), Ares Management Corporation (NYSE:ARES), Bio-Techne Corporation (NASDAQ:TECH), and Zendesk Inc (NYSE:ZEN). This group of stocks’ market valuations resemble WUBA’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $560 million. That figure was $293 million in WUBA’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Ares Management Corporation (NYSE:ARES) is the least popular one with only 16 bullish hedge fund positions. 58.com Inc (NYSE:WUBA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately WUBA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WUBA investors were disappointed as the stock returned 11.3% during the second quarter 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.