Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of China Biologic Products Holdings Inc (NASDAQ:CBPO) based on that data and determine whether they were really smart about the stock.
China Biologic Products Holdings Inc (NASDAQ:CBPO) investors should pay attention to an increase in support from the world's most elite money managers of late. China Biologic Products Holdings Inc (NASDAQ:CBPO) was in 23 hedge funds' portfolios at the end of June. The all time high for this statistics is 27. There were 16 hedge funds in our database with CBPO positions at the end of the first quarter. Our calculations also showed that CBPO isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
James Dinan of York Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers after its stock price crashed. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let's take a look at the recent hedge fund action surrounding China Biologic Products Holdings Inc (NASDAQ:CBPO).
What have hedge funds been doing with China Biologic Products Holdings Inc (NASDAQ:CBPO)?
At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CBPO over the last 20 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Hillhouse Capital Management held the most valuable stake in China Biologic Products Holdings Inc (NASDAQ:CBPO), which was worth $302.7 million at the end of the third quarter. On the second spot was York Capital Management which amassed $137.7 million worth of shares. Maso Capital, Renaissance Technologies, and Pentwater 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 Maso Capital allocated the biggest weight to China Biologic Products Holdings Inc (NASDAQ:CBPO), around 39.11% of its 13F portfolio. Athos Capital is also relatively very bullish on the stock, dishing out 18.83 percent of its 13F equity portfolio to CBPO.
As industrywide interest jumped, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in China Biologic Products Holdings Inc (NASDAQ:CBPO). Marshall Wace LLP had $17.2 million invested in the company at the end of the quarter. James Chen's Ovata Capital Management also initiated a $3.8 million position during the quarter. The other funds with new positions in the stock are Steve Cohen's Point72 Asset Management, Parvinder Thiara's Athanor Capital, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as China Biologic Products Holdings Inc (NASDAQ:CBPO) but similarly valued. We will take a look at Hanesbrands Inc. (NYSE:HBI), Natera Inc (NASDAQ:NTRA), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), Janus Henderson Group plc (NYSE:JHG), Equity Commonwealth (NYSE:EQC), ICL Group Ltd. (NYSE:ICL), and Graphic Packaging Holding Company (NYSE:GPK). This group of stocks' market valuations match CBPO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HBI,31,543895,-5 NTRA,35,634417,3 MNTA,42,733308,6 JHG,30,215555,7 EQC,23,215349,3 ICL,5,6303,2 GPK,32,274367,-1 Average,28.3,374742,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $375 million. That figure was $775 million in CBPO's case. Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 5 bullish hedge fund positions. China Biologic Products Holdings Inc (NASDAQ:CBPO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CBPO is 59.9. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately CBPO wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CBPO investors were disappointed as the stock returned 8.8% in the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.