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Do Hedge Funds Love JOYY Inc. (YY)?

·6 min read

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about JOYY Inc. (NASDAQ:YY).

Hedge fund interest in JOYY Inc. (NASDAQ:YY) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that YY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare YY to other stocks including Manhattan Associates, Inc. (NASDAQ:MANH), Thor Industries, Inc. (NYSE:THO), and United Therapeutics Corporation (NASDAQ:UTHR) to get a better sense of its popularity.

To the average investor there are a large number of signals stock market investors have at their disposal to grade publicly traded companies. Two of the best signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can trounce the broader indices by a significant margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

YORK CAPITAL MANAGEMENT
YORK CAPITAL MANAGEMENT

James Dinan of York Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Now let's review the new hedge fund action surrounding JOYY Inc. (NASDAQ:YY).

Do Hedge Funds Think YY Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards YY over the last 23 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Ken Griffin's Citadel Investment Group has the largest position in JOYY Inc. (NASDAQ:YY), worth close to $111.9 million, corresponding to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Southeastern Asset Management, managed by Mason Hawkins, which holds a $58.7 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish contain Renaissance Technologies, James Dinan's York Capital Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to JOYY Inc. (NASDAQ:YY), around 5.72% of its 13F portfolio. 0 is also relatively very bullish on the stock, designating 3.75 percent of its 13F equity portfolio to YY.

Judging by the fact that JOYY Inc. (NASDAQ:YY) has faced falling interest from the smart money, logic holds that there was a specific group of fund managers who sold off their full holdings by the end of the first quarter. Interestingly, Hyder Ahmad's Broad Peak Investment Holdings dropped the largest investment of the 750 funds tracked by Insider Monkey, comprising an estimated $28.2 million in stock. Daniel S. Och's fund, OZ Management, also said goodbye to its stock, about $28 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as JOYY Inc. (NASDAQ:YY) but similarly valued. We will take a look at Manhattan Associates, Inc. (NASDAQ:MANH), Thor Industries, Inc. (NYSE:THO), United Therapeutics Corporation (NASDAQ:UTHR), ICL Group Ltd. (NYSE:ICL), Brunswick Corporation (NYSE:BC), TELUS International (Cda) Inc. (NYSE:TIXT), and IAA, Inc. (NYSE:IAA). This group of stocks' market valuations resemble YY's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MANH,28,303302,5 THO,21,183769,-3 UTHR,42,2116890,6 ICL,4,43595,-1 BC,42,1037373,6 TIXT,10,36105,10 IAA,35,1199081,0 Average,26,702874,3.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $703 million. That figure was $317 million in YY's case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 4 bullish hedge fund positions. JOYY Inc. (NASDAQ:YY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for YY is 45.4. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately YY wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); YY investors were disappointed as the stock returned -34.2% since the end of March (through 7/16) 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.