Hedge Fund Consensus Stocks vs. Yandex NV (YNDX) In 2019
It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Total Return Index ETFs returned approximately 31% in 2019 (through December 23rd). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 41.1% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds' consensus stock picks generate superior risk-adjusted returns. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Yandex NV (NASDAQ:YNDX).
Is Yandex NV (NASDAQ:YNDX) ready to rally soon? Money managers are getting more optimistic. The number of bullish hedge fund positions went up by 5 recently. Our calculations also showed that YNDX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's take a glance at the key hedge fund action encompassing Yandex NV (NASDAQ:YNDX).
What have hedge funds been doing with Yandex NV (NASDAQ:YNDX)?
At Q3's end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards YNDX over the last 17 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, GQG Partners was the largest shareholder of Yandex NV (NASDAQ:YNDX), with a stake worth $107.2 million reported as of the end of September. Trailing GQG Partners was Sachem Head Capital, which amassed a stake valued at $91 million. Light Street Capital, Arrowstreet Capital, and Lakewood Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kora Management allocated the biggest weight to Yandex NV (NASDAQ:YNDX), around 13.25% of its 13F portfolio. Prince Street Capital Management is also relatively very bullish on the stock, setting aside 13.06 percent of its 13F equity portfolio to YNDX.
As industrywide interest jumped, some big names were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest position in Yandex NV (NASDAQ:YNDX). Two Sigma Advisors had $44.4 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also made a $7.6 million investment in the stock during the quarter. The following funds were also among the new YNDX investors: Steve Cohen's Point72 Asset Management, Benjamin A. Smith's Laurion Capital Management, and Michael Gelband's ExodusPoint Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Yandex NV (NASDAQ:YNDX) but similarly valued. We will take a look at FMC Corporation (NYSE:FMC), InterContinental Hotels Group PLC (NYSE:IHG), Western Gas Partners, LP (NYSE:WES), and Textron Inc. (NYSE:TXT). This group of stocks' market values are closest to YNDX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FMC,36,788705,0 IHG,7,29788,3 WES,10,107648,1 TXT,23,658405,0 Average,19,396137,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $810 million in YNDX's case. FMC Corporation (NYSE:FMC) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 7 bullish hedge fund positions. Yandex NV (NASDAQ:YNDX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on YNDX as the stock returned 59.3% in 2019 (through December 23rd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
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