Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards NetEase, Inc (ADR) (NASDAQ:NTES) to find out whether it was one of their high conviction long-term ideas.
NetEase, Inc (ADR) (NASDAQ:NTES) has experienced a decrease in hedge fund sentiment of late. NTES was in 26 hedge funds’ portfolios at the end of September. There were 36 hedge funds in our database with NTES positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Endo International plc – Ordinary Shares (NASDAQ:ENDP), Dollar Tree, Inc. (NASDAQ:DLTR), and DaVita HealthCare Partners Inc (NYSE:DVA) to gather more data points.
In today’s marketplace there are a large number of gauges stock traders put to use to appraise publicly traded companies. A couple of the most innovative gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the S&P 500 by a significant margin (see the details here).
Keeping this in mind, let’s take a look at the recent action encompassing NetEase, Inc (ADR) (NASDAQ:NTES).
What does the smart money think about NetEase, Inc (ADR) (NASDAQ:NTES)?
At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, William B. Gray’s Orbis Investment Management has the largest position in NetEase, Inc (ADR) (NASDAQ:NTES), worth close to $1.3753 billion, corresponding to 11.7% of its total 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $310.5 million position; 0.7% of its 13F portfolio is allocated to the company. Other peers with similar optimism comprise Rob Citrone’s Discovery Capital Management, Alex Sacerdote’s Whale Rock Capital Management and Dmitry Balyasny’s Balyasny Asset Management.