Is BEKE Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was KE Holdings Inc (NYSE:BEKE).

Is BEKE stock a buy? KE Holdings Inc (NYSE:BEKE) has seen an increase in support from the world’s most elite money managers lately. KE Holdings Inc (NYSE:BEKE) was in 30 hedge funds’ portfolios at the end of December. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BEKE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now we’re going to take a glance at the latest hedge fund action encompassing KE Holdings Inc (NYSE:BEKE).

Do Hedge Funds Think BEKE Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in BEKE a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, ARK Investment Management, managed by Catherine D. Wood, holds the number one position in KE Holdings Inc (NYSE:BEKE). ARK Investment Management has a $408.5 million position in the stock, comprising 1.1% of its 13F portfolio. The second largest stake is held by Lei Zhang of Hillhouse Capital Management, with a $307.7 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise Daniel Sundheim’s D1 Capital Partners, Eashwar Krishnan’s Tybourne Capital Management and Alex Sacerdote’s Whale Rock Capital Management. In terms of the portfolio weights assigned to each position Indus Capital allocated the biggest weight to KE Holdings Inc (NYSE:BEKE), around 8.65% of its 13F portfolio. Tybourne Capital Management is also relatively very bullish on the stock, dishing out 4.24 percent of its 13F equity portfolio to BEKE.

Consequently, key money managers were leading the bulls’ herd. ARK Investment Management, managed by Catherine D. Wood, initiated the largest position in KE Holdings Inc (NYSE:BEKE). ARK Investment Management had $408.5 million invested in the company at the end of the quarter. Eashwar Krishnan’s Tybourne Capital Management also made a $204 million investment in the stock during the quarter. The following funds were also among the new BEKE investors: Richard Driehaus’s Driehaus Capital, Jay Chen’s Himension Capital, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s check out hedge fund activity in other stocks similar to KE Holdings Inc (NYSE:BEKE). We will take a look at Infosys Limited (NYSE:INFY), Activision Blizzard, Inc. (NASDAQ:ATVI), China Petroleum & Chemical Corp (NYSE:SNP), U.S. Bancorp (NYSE:USB), Chubb Limited (NYSE:CB), BP plc (NYSE:BP), and CSX Corporation (NYSE:CSX). This group of stocks’ market valuations match BEKE’s market valuation.

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As you can see these stocks had an average of 42.6 hedge funds with bullish positions and the average amount invested in these stocks was $2751 million. That figure was $2039 million in BEKE’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 13 bullish hedge fund positions. KE Holdings Inc (NYSE:BEKE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BEKE is 49.5. 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. 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 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 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately BEKE wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); BEKE investors were disappointed as the stock returned -13.3% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.

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