Is NetEase, Inc (ADR) (NTES) A Good Stock To Buy?

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Due to the fact that NetEase, Inc (ADR) (NASDAQ:NTES) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few money managers that decided to sell off their positions entirely in the third quarter. It’s worth mentioning that Daniel S. Och’s OZ Management cut the largest position of the 700 funds followed by Insider Monkey, valued at an estimated $164 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dropped about $31.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 10 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to NetEase, Inc (ADR) (NASDAQ:NTES). We will take a look at Endo International plc – Ordinary Shares (NASDAQ:ENDP), Dollar Tree, Inc. (NASDAQ:DLTR), DaVita HealthCare Partners Inc (NYSE:DVA), and Equinix Inc (NASDAQ:EQIX). This group of stocks’ market values are similar to NTES’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENDP 61 4133074 -6
DLTR 52 3273014 -8
DVA 39 4826358 -5
EQIX 42 3237834 1

As you can see these stocks had an average of 48.5 hedge funds with bullish positions and the average amount invested in these stocks was $3868 million. That figure was $2385 million in NTES’s case. Endo International plc – Ordinary Shares (NASDAQ:ENDP) is the most popular stock in this table. On the other hand DaVita HealthCare Partners Inc (NYSE:DVA) is the least popular one with only 39 bullish hedge fund positions. Compared to these stocks NetEase, Inc (ADR) (NASDAQ:NTES) is even less popular than DVA. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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