Youku Tudou Inc (ADR) (YOKU): Insiders and Hedge Funds Aren’t Crazy About It

Is Youku Tudou Inc (ADR) (NYSE:YOKU) a good investment?

If you were to ask many market players, hedge funds are viewed as useless, old financial tools of a period lost to current times. Although there are more than 8,000 hedge funds in operation in present day, this site focuses on the elite of this club, around 525 funds. Analysts calculate that this group oversees most of the hedge fund industry’s total capital, and by tracking their best equity investments, we’ve brought to light a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as crucial, optimistic insider trading sentiment is another way to analyze the investments you’re interested in. Obviously, there are a number of stimuli for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this strategy if you know where to look (learn more here).

What’s more, we’re going to discuss the latest info surrounding Youku Tudou Inc (ADR) (NYSE:YOKU).

How have hedgies been trading Youku Tudou Inc (ADR) (NYSE:YOKU)?

In preparation for the third quarter, a total of 17 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially.

Youku Tudou Inc (ADR) (NYSE:YOKU)According to our 13F database, Bain Capital’s Brookside Capital had the largest position in Youku Tudou Inc (ADR) (NYSE:YOKU), worth close to $156.4 million, comprising 3.7% of its total 13F portfolio. Coming in second is Platinum Asset Management, managed by Kerr Neilson, which held a $138.9 million position; 2.7% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include John Griffin’s Blue Ridge Capital, Lei Zhang’s Hillhouse Capital Management and Brett Barakett’s Tremblant Capital.

Due to the fact Youku Tudou Inc (ADR) (NYSE:YOKU) has witnessed dropping sentiment from upper-tier hedge fund managers, it’s easy to see that there exists a select few funds that elected to cut their positions entirely last quarter. At the top of the heap, SAC Subsidiary’s CR Intrinsic Investors dumped the largest investment of the “upper crust” of funds we track, comprising about $4.3 million in stock. Brian Kelly’s fund, Asian Century Quest, also sold off its stock, about $3.4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Youku Tudou Inc (ADR) (NYSE:YOKU)

Bullish insider trading is particularly usable when the company in question has seen transactions within the past six months. Over the last 180-day time frame, Youku Tudou Inc (ADR) (NYSE:YOKU) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Youku Tudou Inc (ADR) (NYSE:YOKU). These stocks are IAC/InterActiveCorp (NASDAQ:IACI), ValueClick Inc (NASDAQ:VCLK), AOL, Inc. (NYSE:AOL), Zynga Inc (NASDAQ:ZNGA), and HomeAway, Inc. (NASDAQ:AWAY). All of these stocks are in the internet information providers industry and their market caps resemble YOKU’s market cap.