The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Tuniu Corporation (NASDAQ:TOUR) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Tuniu Corporation (NASDAQ:TOUR) a splendid investment now? The best stock pickers are taking a bearish view. The number of bullish hedge fund positions were cut by 1 recently. Our calculations also showed that TOUR isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_365194" align="aligncenter" width="450"] David E. Shaw of D.E. Shaw[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to analyze the fresh hedge fund action surrounding Tuniu Corporation (NASDAQ:TOUR).
How are hedge funds trading Tuniu Corporation (NASDAQ:TOUR)?
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TOUR over the last 17 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Yiheng Capital, managed by Jonathan Guo, holds the largest position in Tuniu Corporation (NASDAQ:TOUR). Yiheng Capital has a $17.9 million position in the stock, comprising 2.2% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, founded by Jim Simons, holding a $3.3 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 Yiheng Capital allocated the biggest weight to Tuniu Corporation (NASDAQ:TOUR), around 2.19% of its portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0028 percent of its 13F equity portfolio to TOUR.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Segantii Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified TOUR as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks similar to Tuniu Corporation (NASDAQ:TOUR). We will take a look at Intelligent Systems Corporation (NYSE:INS), Surgery Partners, Inc. (NASDAQ:SGRY), Home Bancorp, Inc. (NASDAQ:HBCP), and ObsEva SA (NASDAQ:OBSV). All of these stocks' market caps are similar to TOUR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INS,7,99921,0 SGRY,12,31532,1 HBCP,5,10676,3 OBSV,8,49359,0 Average,8,47872,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $21 million in TOUR's case. Surgery Partners, Inc. (NASDAQ:SGRY) is the most popular stock in this table. On the other hand Home Bancorp, Inc. (NASDAQ:HBCP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Tuniu Corporation (NASDAQ:TOUR) is even less popular than HBCP. Hedge funds dodged a bullet by taking a bearish stance towards TOUR. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately TOUR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TOUR investors were disappointed as the stock returned -13.8% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.