Baidu.com, Inc. (ADR) (NASDAQ:BIDU) investors should be aware of a decrease in support from the world’s most elite money managers of late.
If you’d ask most shareholders, hedge funds are viewed as worthless, old investment vehicles of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey choose to focus on the top tier of this group, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the smart money’s total capital, and by keeping an eye on their best investments, we have figured out a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as key, positive insider trading activity is another way to break down the investments you’re interested in. Obviously, there are plenty of incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this tactic if “monkeys” know where to look (learn more here).
Keeping this in mind, let’s take a look at the recent action surrounding Baidu.com, Inc. (ADR) (NASDAQ:BIDU).
How have hedgies been trading Baidu.com, Inc. (ADR) (NASDAQ:BIDU)?
At Q1’s end, a total of 29 of the hedge funds we track were long in this stock, a change of -17% from the previous quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly.
Of the funds we track, Orbis Investment Management, managed by William B. Gray, holds the largest position in Baidu.com, Inc. (ADR) (NASDAQ:BIDU). Orbis Investment Management has a $622 million position in the stock, comprising 5.3% of its 13F portfolio. The second largest stake is held by Chase Coleman and Feroz Dewan of Tiger Global Management LLC, with a $225.4 million position; 3.5% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include William von Mueffling’s Cantillon Capital Management, Kerr Neilson’s Platinum Asset Management and Robert Karr’s Joho Capital.
Seeing as Baidu.com, Inc. (ADR) (NASDAQ:BIDU) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few fund managers who sold off their full holdings heading into Q2. It’s worth mentioning that Brian Kelly’s Asian Century Quest said goodbye to the largest stake of the “upper crust” of funds we watch, comprising an estimated $25.5 million in call options, and Philippe Laffont of Coatue Management was right behind this move, as the fund dropped about $24.6 million worth. These moves are important to note, as total hedge fund interest was cut by 6 funds heading into Q2.
How have insiders been trading Baidu.com, Inc. (ADR) (NASDAQ:BIDU)?
Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time frame, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Baidu.com, Inc. (ADR) (NASDAQ:BIDU). These stocks are Tripadvisor Inc (NASDAQ:TRIP), Yandex NV (NASDAQ:YNDX), Facebook Inc (NASDAQ:FB), LinkedIn Corp (NYSE:LNKD), and Yahoo! Inc. (NASDAQ:YHOO). All of these stocks are in the internet information providers industry and their market caps are similar to BIDU’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Tripadvisor Inc (NASDAQ:TRIP) | 41 | 1 | 1 |
| Yandex NV (NASDAQ:YNDX) | 23 | 0 | 0 |
| Facebook Inc (NASDAQ:FB) | 49 | 0 | 9 |
| LinkedIn Corp (NYSE:LNKD) | 40 | 0 | 13 |
| Yahoo! Inc. (NASDAQ:YHOO) | 66 | 0 | 3 |
With the results demonstrated by the aforementioned time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is no exception.
