In this article we will analyze whether JD.Com Inc (NASDAQ:JD) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is JD.Com Inc (NASDAQ:JD) a good stock to buy now? JD investors should pay attention to a decrease in support from the world’s most elite money managers of late. JD.Com Inc (NASDAQ:JD) was in 85 hedge funds’ portfolios at the end of September. The all time high for this statistics is 90. There were 87 hedge funds in our database with JD positions at the end of the second quarter. Our calculations also showed that JD 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.
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 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely 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, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium 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. With all of this in mind we’re going to take a gander at the latest hedge fund action surrounding JD.Com Inc (NASDAQ:JD).
How have hedgies been trading JD.Com Inc (NASDAQ:JD)?
At Q3’s end, a total of 85 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the second quarter of 2020. By comparison, 60 hedge funds held shares or bullish call options in JD a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tiger Global Management LLC held the most valuable stake in JD.Com Inc (NASDAQ:JD), which was worth $4008.6 million at the end of the third quarter. On the second spot was D1 Capital Partners which amassed $1620.2 million worth of shares. Hillhouse Capital Management, GQG Partners, 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 26.06% of its 13F portfolio. Kylin Management is also relatively very bullish on the stock, earmarking 19.23 percent of its 13F equity portfolio to JD.
Since JD.Com Inc (NASDAQ:JD) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their full holdings last quarter. Interestingly, Andreas Halvorsen’s Viking Global dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising about $497.5 million in stock. Larry Chen and Terry Zhang’s fund, Tairen Capital, also dropped its stock, about $149.4 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to JD.Com Inc (NASDAQ:JD). We will take a look at Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), KE Holdings Inc (NYSE:BEKE), Intrawest Resorts Holdings Inc (NYSE:SNOW), Booking Holdings Inc. (NASDAQ:BKNG), Crown Castle International Corp. (NYSE:CCI), Deere & Company (NYSE:DE), and Goldman Sachs Group, Inc. (NYSE:GS). This group of stocks’ market valuations resemble JD’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 58.4 hedge funds with bullish positions and the average amount invested in these stocks was $3301 million. That figure was $13574 million in JD’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand KE Holdings Inc (NYSE:BEKE) is the least popular one with only 28 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 overall hedge fund sentiment score for JD is 64.9. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on JD as the stock returned 15.2% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.