Is Shinhan Financial Group Co., Ltd. (ADR) (SHG) Going To Burn Investors?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article we look at what those investors think of Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG).

Is Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG) a healthy stock for your portfolio? The best stock pickers are getting less bullish. The number of bullish hedge fund bets that are revealed through 13F filings contracted by 2 in recent months. 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 Vipshop Holdings Ltd – ADR (NYSE:VIPS), Shire PLC (ADR) (NASDAQ:SHPG), and EnergySolutions, Inc. (NYSE:ES) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Hedge fund activity in Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG)

At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 22% drop from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in SHG heading into this year, so hedge fund ownership of the stock is still up in 2016. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, William B. Gray’s Orbis Investment Management has the most valuable position in Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG), worth close to $7.6 million. Coming in second is Fisher Asset Management, led by Ken Fisher, holding a $2.6 million position. Remaining professional money managers that are bullish include D E Shaw, one of the biggest hedge funds in the world, Richard S. Pzena’s Pzena Investment Management, and Israel Englander’s Millennium Management. We should note that Orbis Investment Management is among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

Since Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG) has witnessed falling interest from hedge fund managers, logic holds that there were a few fund managers that elected to cut their positions entirely heading into Q4. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest stake of the 700 funds followed by Insider Monkey, totaling close to $2.3 million in stock. Jim Simons’ fund, Renaissance Technologies, also dropped its stock, about $0.7 million worth.

Let’s now review hedge fund activity in other stocks similar to Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG). These stocks are Vipshop Holdings Ltd – ADR (NYSE:VIPS), Shire PLC (ADR) (NASDAQ:SHPG), EnergySolutions, Inc. (NYSE:ES), and Marriott International Inc (NYSE:MAR). This group of stocks’ market caps are similar to SHG’s market cap.

As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1.84 billion. That figure was just $14 million in SHG’s case. Shire PLC (ADR) (NASDAQ:SHPG) is the most popular stock in this table. On the other hand EnergySolutions, Inc. (NYSE:ES) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG) is even less popular than ES. 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.

Disclosure: None