At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not YY Inc (NASDAQ:YY) makes for a good investment right now.
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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's go over the key hedge fund action encompassing YY Inc (NASDAQ:YY).
How are hedge funds trading YY Inc (NASDAQ:YY)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards YY over the last 13 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Sylebra Capital Management was the largest shareholder of YY Inc (NASDAQ:YY), with a stake worth $41.7 million reported as of the end of September. Trailing Sylebra Capital Management was GLG Partners, which amassed a stake valued at $25.7 million. Platinum Asset Management, Citadel Investment Group, and Kerrisdale Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers were leading the bulls' herd. Lakewood Capital Management, managed by Anthony Bozza, assembled the most outsized position in YY Inc (NASDAQ:YY). Lakewood Capital Management had $13.8 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $2.4 million position during the quarter. The following funds were also among the new YY investors: Panayotis Takis Sparaggis's Alkeon Capital Management, George McCabe's Portolan Capital Management, and D. E. Shaw's D E Shaw.
Let's also examine hedge fund activity in other stocks similar to YY Inc (NASDAQ:YY). We will take a look at Casey's General Stores, Inc. (NASDAQ:CASY), Choice Hotels International, Inc. (NYSE:CHH), Cinemark Holdings, Inc. (NYSE:CNK), and Arris International plc (NASDAQ:ARRS). This group of stocks' market caps are similar to YY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CASY,18,88964,1 CHH,18,276727,1 CNK,19,248506,4 ARRS,23,645342,-2 Average,19.5,314885,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $315 million. That figure was $201 million in YY's case. Arris International plc (NASDAQ:ARRS) is the most popular stock in this table. On the other hand Casey's General Stores, Inc. (NASDAQ:CASY) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks YY Inc (NASDAQ:YY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.