In this article we will check out the progression of hedge fund sentiment towards DouYu International Holdings Limited (NASDAQ:DOYU) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is DouYu International Holdings Limited (NASDAQ:DOYU) ready to rally soon? The best stock pickers are becoming hopeful. The number of long hedge fund bets increased by 9 in recent months. Our calculations also showed that DOYU isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). DOYU was in 15 hedge funds' portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with DOYU positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26088" align="aligncenter" width="392"] Chase Coleman of Tiger Global[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a glance at the latest hedge fund action encompassing DouYu International Holdings Limited (NASDAQ:DOYU).
Hedge fund activity in DouYu International Holdings Limited (NASDAQ:DOYU)
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 150% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in DOYU a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sylebra Capital Management held the most valuable stake in DouYu International Holdings Limited (NASDAQ:DOYU), which was worth $21.6 million at the end of the third quarter. On the second spot was Tiger Global Management LLC which amassed $2.6 million worth of shares. Guardian Point Capital, Marshall Wace LLP, and Citadel Investment Group 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 Guardian Point Capital allocated the biggest weight to DouYu International Holdings Limited (NASDAQ:DOYU), around 1.02% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, setting aside 0.88 percent of its 13F equity portfolio to DOYU.
Consequently, some big names have jumped into DouYu International Holdings Limited (NASDAQ:DOYU) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in DouYu International Holdings Limited (NASDAQ:DOYU). Marshall Wace LLP had $1 million invested in the company at the end of the quarter. Alexander West's Blue Pool Capital also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith's Laurion Capital Management, Ernest Chow and Jonathan Howe's Sensato Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as DouYu International Holdings Limited (NASDAQ:DOYU) but similarly valued. These stocks are Sterling Bancorp (NYSE:STL), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), Brookfield Business Partners L.P. (NYSE:BBU), and Integer Holdings Corporation (NYSE:ITGR). This group of stocks' market values match DOYU's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STL,25,176182,-5 ICPT,19,258760,-8 BBU,2,1459,-2 ITGR,20,88925,0 Average,16.5,131332,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $30 million in DOYU's case. Sterling Bancorp (NYSE:STL) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 2 bullish hedge fund positions. DouYu International Holdings Limited (NASDAQ:DOYU) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on DOYU as the stock returned 73.2% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.