Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Beigene Ltd (ADR) (NASDAQ:BGNE) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. BGNE was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 14 hedge funds in our database with BGNE positions 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 Chimerix Inc (NASDAQ:CMRX), Capitol Acquisition Corp III (NASDAQ:CLACU), and B. Riley Financial Inc (NASDAQ:RILY) 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 Beigene Ltd (ADR) (NASDAQ:BGNE)
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 7% rise from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BGNE over the last 5 quarters (the company went public in early-2016). With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the largest position in Beigene Ltd (ADR) (NASDAQ:BGNE), worth close to $58.9 million. Coming in second is Hillhouse Capital Management, led by Lei Zhang, which holds a $21.6 million position. Some other hedge funds and institutional investors that hold long positions consist of Kris Jenner, Gordon Bussard, and Graham McPhail’s Rock Springs Capital Management, Daniel Gold’s QVT Financial, and Peter Kolchinsky’s RA Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.