Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Sogou Inc. (NYSE:SOGO).
Is SOGO a good stock to buy now? Sogou Inc. (NYSE:SOGO) has seen an increase in activity from the world’s largest hedge funds of late. Sogou Inc. (NYSE:SOGO) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SOGO 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.
According to most stock holders, hedge funds are viewed as unimportant, old investment tools of the past. While there are more than 8000 funds in operation at the moment, Our experts choose to focus on the moguls of this group, about 850 funds. It is estimated that this group of investors direct the majority of the hedge fund industry’s total asset base, and by tailing their first-class picks, Insider Monkey has unsheathed a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we’re going to go over the latest hedge fund action encompassing Sogou Inc. (NYSE:SOGO).
Do Hedge Funds Think SOGO Is A Good Stock To Buy Now?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from the second quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in SOGO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sogou Inc. (NYSE:SOGO) was held by TIG Advisors, which reported holding $43.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $28.9 million position. Other investors bullish on the company included Omni Partners, Pentwater Capital Management, and GLG Partners. In terms of the portfolio weights assigned to each position TIG Advisors allocated the biggest weight to Sogou Inc. (NYSE:SOGO), around 2.36% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, earmarking 1.55 percent of its 13F equity portfolio to SOGO.
As one would reasonably expect, some big names have jumped into Sogou Inc. (NYSE:SOGO) headfirst. TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, established the largest position in Sogou Inc. (NYSE:SOGO). TIG Advisors had $43.7 million invested in the company at the end of the quarter. Steven Clark’s Omni Partners also initiated a $19.8 million position during the quarter. The other funds with brand new SOGO positions are Matthew Halbower’s Pentwater Capital Management, Noam Gottesman’s GLG Partners, and David Alexander Witkin’s Beryl Capital Management.
Let’s now review hedge fund activity in other stocks similar to Sogou Inc. (NYSE:SOGO). These stocks are LivePerson, Inc. (NASDAQ:LPSN), The Chemours Company (NYSE:CC), Cosan Limited (NYSE:CZZ), Agree Realty Corporation (NYSE:ADC), Unum Group (NYSE:UNM), Boyd Gaming Corporation (NYSE:BYD), and Cannae Holdings, Inc. (NYSE:CNNE). All of these stocks’ market caps are similar to SOGO’s market cap.
|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 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $281 million. That figure was $139 million in SOGO’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand Cosan Limited (NYSE:CZZ) is the least popular one with only 14 bullish hedge fund positions. Sogou Inc. (NYSE:SOGO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SOGO is 43.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 December 14th and surpassed the market again by 15.8 percentage points. Unfortunately SOGO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SOGO investors were disappointed as the stock returned -10% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.