With the three major indexes firmly in the red beginning in 2016, shares of Yahoo! Inc. (NASDAQ:YHOO), Apple Inc. (NASDAQ:AAPL), Alibaba Group Holding Ltd (NYSE:BABA), JD.Com Inc (ADR) (NASDAQ:JD), and Tesla Motors Inc (NASDAQ:TSLA) are each moving on the back of different catalysts. Let’s take a closer look at the developments surrounding the latest performance of each stock.
Moreover, we will also examine relevant hedge fund sentiment toward the equities. Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 52 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. 48.6% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
Yahoo! Inc. (NASDAQ:YHOO) shares are 4.8% in the red as Shanghai’s 7% sell off and the NASDAQ’s 2.6% sell off weigh on the stock. Since most of Yahoo’s value is in Alibaba Group Holding Ltd (NYSE:BABA) and Alibaba’s shares are correlated with China’s main index’s performance, Yahoo investors have been less optimistic as Shanghai investors have become more gloomy due to disappointing manufacturing data out of China. Yahoo! Inc. (NASDAQ:YHOO) is also trending after the New York Post published an article stating that the company’s board is losing patience with CEO Marissa Mayer and that the activist fund Starboard Value, managed by Jeffrey Smith, plans to fight to install a new board. A total of 89 funds from our database amassed 20.1% of Yahoo at the end of September.
Apple Inc. (NASDAQ:AAPL) is down by 1.9% in morning trading as the Shanghai sell-off weighs on the tech giant. Apple Inc. (NASDAQ:AAPL) depends on China for a meaningful part of its profits and the company will need demand to remain strong in the country with 1.4 billion people so that it can prove analysts and bears wrong by maintaining positive to flat iPhone sales growth for 2016. Despite the sell off, Apple still has many hedge fund fans who believe in the company, with Carl Icahn’s Icahn Capital LP and David Einhorn’s Greenlight Capital as major shareholders as of the end of the third quarter.
On the next page, we examine Alibaba Group Holding, JD.Com, and Tesla Motors.