Is Vipshop Holdings Ltd – ADR (VIPS) Going to Burn These Hedge Funds?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Vipshop Holdings Ltd – ADR (NYSE:VIPS) in this article.

Is Vipshop Holdings Ltd – ADR (NYSE:VIPS) a cheap stock to buy now? The best stock pickers are in a bearish mood. The number of long hedge fund positions fell by 14 recently. VIPS was in 40 hedge funds’ portfolios at the end of the third quarter of 2015. There were 54 hedge funds in our database with VIPS holdings 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 Waters Corporation (NYSE:WAT), Empresa Nacional de Electricidad (ADR) (NYSE:EOC), and Cimarex Energy Co (NYSE:XEC) to gather more data points.

In the eyes of most shareholders, hedge funds are perceived as unimportant, outdated financial tools of years past. While there are greater than 8000 funds trading at present, Our experts hone in on the top tier of this club, around 700 funds. These money managers have their hands on the lion’s share of the hedge fund industry’s total asset base, and by tailing their finest stock picks, Insider Monkey has identified many investment strategies that have historically outperformed the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, we’re going to take a gander at the key action encompassing Vipshop Holdings Ltd – ADR (NYSE:VIPS).

How are hedge funds trading Vipshop Holdings Ltd – ADR (NYSE:VIPS)?

At Q3’s end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the second quarter. With hedgies’ capital changing hands, there exist a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Kylin Management, managed by Ted Kang, holds the most valuable position in Vipshop Holdings Ltd – ADR (NYSE:VIPS). Kylin Management has a $298.1 million position in the stock, comprising 31.8% of its 13F portfolio. The second largest stake is held by Tiger Global Management LLC, led by Chase Coleman, holding a $293 million position; 3.6% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish consist of John Burbank’s Passport Capital, George Soros’s Soros Fund Management and John Lykouretzos’s Hoplite Capital Management.

Due to the fact that Vipshop Holdings Ltd – ADR (NYSE:VIPS) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few money managers who sold off their entire stakes last quarter. It’s worth mentioning that J Kevin Kenny Jr’s Emerging Sovereign Group sold off the biggest position of all the hedgies watched by Insider Monkey, totaling close to $149.7 million in stock. Rob Citrone’s fund, Discovery Capital Management, also dumped its stock, about $122.1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 14 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Vipshop Holdings Ltd – ADR (NYSE:VIPS) but similarly valued. We will take a look at Waters Corporation (NYSE:WAT), Empresa Nacional de Electricidad (ADR) (NYSE:EOC), Cimarex Energy Co (NYSE:XEC), and Bed Bath & Beyond Inc. (NASDAQ:BBBY). This group of stocks’ market values resemble VIPS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WAT 28 621264 -2
EOC 7 12494 0
XEC 40 1298274 3
BBBY 33 743154 1

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $669 million. That figure was $1433 million in VIPS’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table, whereas Empresa Nacional de Electricidad (ADR) (NYSE:EOC)) with only 7 bullish hedge fund positions is the least popular one in this particular group. In comparison, with 40 bullish hedge fund positions Vipshop Holdings Ltd – ADR (NYSE:VIPS) it has the same popularity as Cimarex Energy Co (NYSE:XEC). This may imply it is a good stock to buy, but further research is still needed.