How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Bilibili Inc. (NASDAQ:BILI).
Bilibili Inc. (NASDAQ:BILI) has seen a decrease in support from the world’s most elite money managers in recent months. Bilibili Inc. (NASDAQ:BILI) was in 47 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 53. Our calculations also showed that BILI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Lei Zhang of Hillhouse Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s go over the recent hedge fund action surrounding Bilibili Inc. (NASDAQ:BILI).
Do Hedge Funds Think BILI Is A Good Stock To Buy Now?
At the end of June, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BILI over the last 24 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jonathan Guo’s Yiheng Capital has the number one position in Bilibili Inc. (NASDAQ:BILI), worth close to $591.7 million, comprising 23.8% of its total 13F portfolio. Sitting at the No. 2 spot is Alkeon Capital Management, led by Panayotis Takis Sparaggis, holding a $252.2 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish include Lei Zhang’s Hillhouse Capital Management, and Josh Resnick’s Jericho Capital Asset Management. In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Bilibili Inc. (NASDAQ:BILI), around 23.81% of its 13F portfolio. Cartica Management is also relatively very bullish on the stock, designating 16.02 percent of its 13F equity portfolio to BILI.
Because Bilibili Inc. (NASDAQ:BILI) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of money managers that decided to sell off their positions entirely heading into Q3. Interestingly, Lone Pine Capital dropped the biggest investment of the 750 funds watched by Insider Monkey, worth about $449.7 million in stock. Alex Sacerdote’s fund, Whale Rock Capital Management, also sold off its stock, about $197.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 6 funds heading into Q3.
Let’s check out hedge fund activity in other stocks similar to Bilibili Inc. (NASDAQ:BILI). We will take a look at IQVIA Holdings, Inc. (NYSE:IQV), Walgreens Boots Alliance Inc (NASDAQ:WBA), National Grid plc (NYSE:NGG), Koninklijke Philips NV (NYSE:PHG), Lloyds Banking Group PLC (NYSE:LYG), Kimberly Clark Corporation (NYSE:KMB), and Constellation Brands, Inc. (NYSE:STZ). This group of stocks’ market caps are closest to BILI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IQV | 69 | 3809269 | 7 |
| WBA | 41 | 1113117 | 0 |
| NGG | 7 | 352045 | -2 |
| PHG | 10 | 122622 | -1 |
| LYG | 8 | 16299 | 3 |
| KMB | 37 | 903375 | 6 |
| STZ | 50 | 1607881 | -8 |
| Average | 31.7 | 1132087 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1132 million. That figure was $2001 million in BILI’s case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 7 bullish hedge fund positions. Bilibili Inc. (NASDAQ:BILI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BILI is 57.9. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and beat the market again by 3.1 percentage points. Unfortunately BILI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BILI were disappointed as the stock returned -38.6% since the end of June (through 11/5) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Bilibili Inc. (NASDAQ:BILI)
Follow Bilibili Inc. (NASDAQ:BILI)
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Disclosure: None. This article was originally published at Insider Monkey.
