Is Autohome Inc (ATHM) A Good Stock To Buy?

We at Insider Monkey have gone over 738 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. In this article, we look at what those funds think of Autohome Inc (NYSE:ATHM) based on that data.

Is Autohome Inc (NYSE:ATHM) a cheap investment right now? Investors who are in the know are in a bullish mood. The number of long hedge fund positions moved up by 2 recently. Our calculations also showed that athm isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Kerr Neilson

Let’s take a gander at the fresh hedge fund action regarding Autohome Inc (NYSE:ATHM).

What does smart money think about Autohome Inc (NYSE:ATHM)?

Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in ATHM a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with ATHM Positions

Among these funds, Orbis Investment Management held the most valuable stake in Autohome Inc (NYSE:ATHM), which was worth $1029.6 million at the end of the first quarter. On the second spot was Platinum Asset Management which amassed $102.7 million worth of shares. Moreover, D E Shaw, GLG Partners, and AQR Capital Management were also bullish on Autohome Inc (NYSE:ATHM), allocating a large percentage of their portfolios to this stock.

Consequently, specific money managers have jumped into Autohome Inc (NYSE:ATHM) headfirst. Platinum Asset Management, managed by Kerr Neilson, assembled the largest position in Autohome Inc (NYSE:ATHM). Platinum Asset Management had $102.7 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $21.5 million position during the quarter. The following funds were also among the new ATHM investors: Matthew Hulsizer’s PEAK6 Capital Management, Benjamin A. Smith’s Laurion Capital Management, and Simon Sadler’s Segantii Capital.

Let’s check out hedge fund activity in other stocks similar to Autohome Inc (NYSE:ATHM). These stocks are Huazhu Group Limited (NASDAQ:HTHT), BanColombia S.A. (NYSE:CIB), Advance Auto Parts, Inc. (NYSE:AAP), and Universal Health Services, Inc. (NYSE:UHS). All of these stocks’ market caps are similar to ATHM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HTHT 14 196127 -1
CIB 11 154486 5
AAP 47 2297068 -4
UHS 29 761401 1
Average 25.25 852271 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $852 million. That figure was $1252 million in ATHM’s case. Advance Auto Parts, Inc. (NYSE:AAP) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 11 bullish hedge fund positions. Autohome Inc (NYSE:ATHM) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ATHM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ATHM investors were disappointed as the stock returned -15.4% during the same time 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.