Macro Factors Still Dragging Down Some Of Yesterday’s Biggest Losers

Lastly is the 12.7% dip in the Chinese Internet television company,  Youku Tudou Inc (ADR) (NYSE:YOKU)’s shares, owing to the same forces that pulled down SouFun Holdings Ltd (NYSE:SFUN). Not on stock on the list rebounded today, as Youku has dropped by another 7% in afternoon trading today. However, the stock is still up by more than 7% year-to-date and is currently trading well above its 52-week low. Although the company missed the estimates for the bottom line in its financial results for the first quarter, it outperformed on the top line front and provided a strong guidance for the second quarter. Kerr Nielson‘s Platinum Asset Management also owns a big stake in the other Chinese equity, about 12.23 million shares of Youku Tudou Inc (ADR) (NYSE:YOKU) valued at $152.94 million, representing about 3.05% of the fund’s portfolio value.

An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like these renowned funds with adequate knowledge and resources can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 80 percentage points and returning over 135%, while hedge funds themselves have collectively underperformed the market (read the details here).

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