Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Qiwi PLC (NASDAQ:QIWI).
Is Qiwi PLC (NASDAQ:QIWI) a splendid investment right now? The smart money is becoming more confident. The number of long hedge fund bets improved by 4 lately. Our calculations also showed that QIWI isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's take a gander at the recent hedge fund action regarding Qiwi PLC (NASDAQ:QIWI).
What does smart money think about Qiwi PLC (NASDAQ:QIWI)?
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in QIWI a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Qiwi PLC (NASDAQ:QIWI) was held by Melqart Asset Management, which reported holding $36.5 million worth of stock at the end of March. It was followed by Platinum Asset Management with a $22.5 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Arrowstreet Capital.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. CSat Investment Advisory, managed by Claes Fornell, assembled the biggest position in Qiwi PLC (NASDAQ:QIWI). CSat Investment Advisory had $1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Matthew Hulsizer's PEAK6 Capital Management, and Matthew Tewksbury's Stevens Capital Management.
Let's now review hedge fund activity in other stocks similar to Qiwi PLC (NASDAQ:QIWI). These stocks are Changyou.Com Ltd (NASDAQ:CYOU), MacroGenics Inc (NASDAQ:MGNX), Wesco Aircraft Holdings Inc (NYSE:WAIR), and Gran Tierra Energy Inc. (NYSE:GTE). This group of stocks' market valuations resemble QIWI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYOU,11,47035,4 MGNX,23,139857,5 WAIR,22,195494,5 GTE,16,269130,0 Average,18,162879,3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $78 million in QIWI's case. MacroGenics Inc (NASDAQ:MGNX) is the most popular stock in this table. On the other hand Changyou.Com Ltd (NASDAQ:CYOU) is the least popular one with only 11 bullish hedge fund positions. Qiwi PLC (NASDAQ:QIWI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on QIWI as the stock returned 42.5% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.