In this article we will analyze whether Senmiao Technology Limited (NASDAQ:AIHS) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Senmiao Technology Limited (NASDAQ:AIHS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. Our calculations also showed that AIHS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 China Natural Resources, Inc. (NASDAQ:CHNR), AmeriServ Financial, Inc. (NASDAQ:ASRV), and Kiromic BioPharma, Inc. (NASDAQ:KRBP) to gather more data points.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Now let’s view the new hedge fund action encompassing Senmiao Technology Limited (NASDAQ:AIHS).
Do Hedge Funds Think AIHS Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AIHS over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, John Overdeck and David Siegel’s Two Sigma Advisors has the largest position in Senmiao Technology Limited (NASDAQ:AIHS), worth close to $0.1 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to Senmiao Technology Limited (NASDAQ:AIHS), around 0.0004% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0001 percent of its 13F equity portfolio to AIHS.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks similar to Senmiao Technology Limited (NASDAQ:AIHS). We will take a look at China Natural Resources, Inc. (NASDAQ:CHNR), AmeriServ Financial, Inc. (NASDAQ:ASRV), Kiromic BioPharma, Inc. (NASDAQ:KRBP), Air T, Inc. (NASDAQ:AIRT), Organovo Holdings Inc (NASDAQ:ONVO), Greenlane Holdings, Inc. (NASDAQ:GNLN), and urban-gro, Inc. (NASDAQ:UGRO). This group of stocks’ market caps are similar to AIHS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHNR | 3 | 589 | 0 |
| ASRV | 3 | 7434 | 0 |
| KRBP | 1 | 203 | 0 |
| AIRT | 2 | 4214 | 0 |
| ONVO | 3 | 8161 | 1 |
| GNLN | 9 | 4734 | 3 |
| UGRO | 1 | 206 | 1 |
| Average | 3.1 | 3649 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $0 million in AIHS’s case. Greenlane Holdings, Inc. (NASDAQ:GNLN) is the most popular stock in this table. On the other hand Kiromic BioPharma, Inc. (NASDAQ:KRBP) is the least popular one with only 1 bullish hedge fund positions. Senmiao Technology Limited (NASDAQ:AIHS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AIHS is 47.5. 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 negative signal and 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately AIHS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AIHS investors were disappointed as the stock returned -25% since the end of March (through 6/11) 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 most of these stocks already outperformed the market in 2021.
Disclosure: None. This article was originally published at Insider Monkey.