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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of So-Young International Inc. (NASDAQ:SY).
So-Young International Inc. (NASDAQ:SY) was in 6 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 8. SY shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 8 hedge funds in our database with SY positions at the end of the fourth quarter. Our calculations also showed that SY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $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. Keeping this in mind let's check out the recent hedge fund action regarding So-Young International Inc. (NASDAQ:SY).
Do Hedge Funds Think SY Is A Good Stock To Buy Now?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SY over the last 23 quarters. So, let's review 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, Renaissance Technologies, holds the number one position in So-Young International Inc. (NASDAQ:SY). Renaissance Technologies has a $3.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is John Overdeck and David Siegel of Two Sigma Advisors, with a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions consist of Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group and Michael Gelband's ExodusPoint Capital. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to So-Young International Inc. (NASDAQ:SY), around 0.0041% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, dishing out 0.0034 percent of its 13F equity portfolio to SY.
Due to the fact that So-Young International Inc. (NASDAQ:SY) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there were a few hedgies that slashed their entire stakes heading into Q2. At the top of the heap, Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital) said goodbye to the biggest investment of the "upper crust" of funds watched by Insider Monkey, worth close to $1.1 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also sold off its stock, about $0.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q2.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as So-Young International Inc. (NASDAQ:SY) but similarly valued. We will take a look at Tekla Healthcare Investors (NYSE:HQH), First Foundation Inc (NASDAQ:FFWM), Energy Recovery, Inc. (NASDAQ:ERII), IES Holdings, Inc. (NASDAQ:IESC), Sutro Biopharma, Inc. (NASDAQ:STRO), New Gold Inc. (NYSE:NGD), and SI-BONE, Inc. (NASDAQ:SIBN). This group of stocks' market valuations resemble SY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HQH,1,351,0 FFWM,16,65392,5 ERII,16,98107,5 IESC,11,639028,1 STRO,28,315317,-6 NGD,14,70037,2 SIBN,26,208026,-4 Average,16,199465,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $199 million. That figure was $5 million in SY's case. Sutro Biopharma, Inc. (NASDAQ:STRO) is the most popular stock in this table. On the other hand Tekla Healthcare Investors (NYSE:HQH) is the least popular one with only 1 bullish hedge fund positions. So-Young International Inc. (NASDAQ:SY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SY is 34.8. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately SY wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SY investors were disappointed as the stock returned -1.9% since the end of March (through 6/25) 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.
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Disclosure: None. This article was originally published at Insider Monkey.