Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 835 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is JD.Com Inc (NASDAQ:JD), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
JD.Com Inc (NASDAQ:JD) has experienced an increase in hedge fund sentiment in recent months. JD was in 63 hedge funds’ portfolios at the end of December. There were 60 hedge funds in our database with JD holdings at the end of the previous quarter. Our calculations also showed that JD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most investors, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds in operation at present, We choose to focus on the upper echelon of this group, approximately 850 funds. These money managers direct most of the hedge fund industry’s total capital, and by watching their finest stock picks, Insider Monkey has determined a few investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind we’re going to review the latest hedge fund action encompassing JD.Com Inc (NASDAQ:JD).
How have hedgies been trading JD.Com Inc (NASDAQ:JD)?
Heading into the first quarter of 2020, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in JD a year ago. 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, Tiger Global Management LLC was the largest shareholder of JD.Com Inc (NASDAQ:JD), with a stake worth $1861.9 million reported as of the end of September. Trailing Tiger Global Management LLC was Viking Global, which amassed a stake valued at $783 million. D1 Capital Partners, Hillhouse Capital Management, and Fisher 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 Kontiki Capital allocated the biggest weight to JD.Com Inc (NASDAQ:JD), around 29.16% of its 13F portfolio. Tiger Global Management LLC is also relatively very bullish on the stock, designating 10.27 percent of its 13F equity portfolio to JD.
Consequently, specific money managers were leading the bulls’ herd. Maplelane Capital, managed by Leon Shaulov, assembled the largest position in JD.Com Inc (NASDAQ:JD). Maplelane Capital had $41.5 million invested in the company at the end of the quarter. Run Ye, Junji Takegami and Hoyon Hwang’s Tiger Pacific Capital also made a $32.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Kamyar Khajavi’s MIK Capital, Campbell Wilson’s Old Well Partners, and Joseph Samuels’s Islet Management.
Let’s check out hedge fund activity in other stocks similar to JD.Com Inc (NASDAQ:JD). These stocks are ABB Ltd (NYSE:ABB), General Dynamics Corporation (NYSE:GD), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), and Uber Technologies, Inc. (NYSE:UBER). This group of stocks’ market caps are similar to JD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABB | 10 | 372334 | -3 |
| GD | 46 | 6699253 | 4 |
| SMFG | 11 | 584035 | 0 |
| UBER | 94 | 6677417 | 46 |
| Average | 40.25 | 3583260 | 11.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.25 hedge funds with bullish positions and the average amount invested in these stocks was $3583 million. That figure was $6041 million in JD’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand ABB Ltd (NYSE:ABB) is the least popular one with only 10 bullish hedge fund positions. JD.Com Inc (NASDAQ:JD) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Hedge funds were also right about betting on JD as the stock returned 22.9% during the first quarter (through March 2nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
