The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Baidu, Inc. (NASDAQ:BIDU).
Is BIDU a good stock to buy now? Baidu, Inc. (NASDAQ:BIDU) has seen a decrease in support from the world’s most elite money managers recently. Baidu, Inc. (NASDAQ:BIDU) was in 43 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 72. There were 49 hedge funds in our database with BIDU holdings at the end of June. Our calculations also showed that BIDU isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 view the fresh hedge fund action encompassing Baidu, Inc. (NASDAQ:BIDU).
Do Hedge Funds Think BIDU Is A Good Stock To Buy Now?
At Q3’s end, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. By comparison, 48 hedge funds held shares or bullish call options in BIDU 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.
More specifically, Renaissance Technologies was the largest shareholder of Baidu, Inc. (NASDAQ:BIDU), with a stake worth $1334.9 million reported as of the end of September. Trailing Renaissance Technologies was Ariel Investments, which amassed a stake valued at $360.6 million. First Pacific Advisors LLC, Citadel Investment Group, 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 Oasis Management allocated the biggest weight to Baidu, Inc. (NASDAQ:BIDU), around 8.41% of its 13F portfolio. Keywise Capital Management is also relatively very bullish on the stock, setting aside 6.4 percent of its 13F equity portfolio to BIDU.
Due to the fact that Baidu, Inc. (NASDAQ:BIDU) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there were a few hedgies that decided to sell off their full holdings by the end of the third quarter. It’s worth mentioning that Jonathan Guo’s Yiheng Capital dumped the largest position of all the hedgies watched by Insider Monkey, totaling about $63.6 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund dropped about $54.6 million worth. These moves are important to note, as total hedge fund interest was cut by 6 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Baidu, Inc. (NASDAQ:BIDU) but similarly valued. These stocks are Ambev SA (NYSE:ABEV), Vodafone Group Plc (NASDAQ:VOD), Twilio Inc. (NYSE:TWLO), ConocoPhillips (NYSE:COP), Twitter Inc (NYSE:TWTR), Cintas Corporation (NASDAQ:CTAS), and Southern Copper Corporation (NYSE:SCCO). This group of stocks’ market valuations are closest to BIDU’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 42.7 hedge funds with bullish positions and the average amount invested in these stocks was $1224 million. That figure was $2805 million in BIDU’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 21 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 37.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on BIDU as the stock returned 14.5% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.