Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Baidu, Inc. (NASDAQ:BIDU).
Is BIDU stock a buy or sell? Baidu, Inc. (NASDAQ:BIDU) has seen an increase in activity from the world’s largest hedge funds recently. Baidu, Inc. (NASDAQ:BIDU) was in 51 hedge funds’ portfolios at the end of December. The all time high for this statistic is 72. Our calculations also showed that BIDU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Now let’s go over the new hedge fund action surrounding Baidu, Inc. (NASDAQ:BIDU).
Do Hedge Funds Think BIDU Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BIDU over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Baidu, Inc. (NASDAQ:BIDU), with a stake worth $1857.5 million reported as of the end of December. Trailing Renaissance Technologies was Ariel Investments, which amassed a stake valued at $633.7 million. ARK Investment Management, First Pacific Advisors LLC, and Southeastern Asset Management 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 Ariose Capital allocated the biggest weight to Baidu, Inc. (NASDAQ:BIDU), around 18.92% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, earmarking 9.83 percent of its 13F equity portfolio to BIDU.
As aggregate interest increased, specific money managers have jumped into Baidu, Inc. (NASDAQ:BIDU) headfirst. Holocene Advisors, managed by Brandon Haley, initiated the biggest position in Baidu, Inc. (NASDAQ:BIDU). Holocene Advisors had $109 million invested in the company at the end of the quarter. Michael Kharitonov and Jon David McAuliffe’s Voleon Capital also initiated a $59.5 million position during the quarter. The other funds with brand new BIDU positions are Jack Woodruff’s Candlestick Capital Management, Steve Cohen’s Point72 Asset Management, and Mark Kingdon’s Kingdon Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Baidu, Inc. (NASDAQ:BIDU) but similarly valued. These stocks are Prologis Inc (NYSE:PLD), Colgate-Palmolive Company (NYSE:CL), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), Gilead Sciences, Inc. (NASDAQ:GILD), Becton, Dickinson and Company (NYSE:BDX), KE Holdings Inc (NYSE:BEKE), and Infosys Limited (NYSE:INFY). This group of stocks’ market caps are closest to BIDU’s market cap.
|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 42.3 hedge funds with bullish positions and the average amount invested in these stocks was $1898 million. That figure was $4634 million in BIDU’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 23 bullish hedge fund positions. Baidu, Inc. (NASDAQ:BIDU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BIDU is 59.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on BIDU as the stock returned 19.1% since the end of Q4 (through 3/19) 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.