Is Qiwi PLC (NASDAQ:QIWI) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Qiwi PLC (NASDAQ:QIWI) was in 13 hedge funds' portfolios at the end of June. QIWI shareholders have witnessed an increase in activity from the world's largest hedge funds lately. There were 12 hedge funds in our database with QIWI holdings at the end of the previous quarter. Our calculations also showed that QIWI isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the key hedge fund action surrounding Qiwi PLC (NASDAQ:QIWI).
How have hedgies been trading Qiwi PLC (NASDAQ:QIWI)?
At Q2's end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in QIWI over the last 16 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in Qiwi PLC (NASDAQ:QIWI) was held by Melqart Asset Management, which reported holding $40.7 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $24.9 million position. Other investors bullish on the company included Platinum Asset Management, Arrowstreet Capital, and Millennium Management.
Consequently, key money managers have jumped into Qiwi PLC (NASDAQ:QIWI) headfirst. GLG Partners, managed by Noam Gottesman, created the largest position in Qiwi PLC (NASDAQ:QIWI). GLG Partners had $3 million invested in the company at the end of the quarter. Ravee Mehta's Nishkama Capital also made a $1.6 million investment in the stock during the quarter. The following funds were also among the new QIWI investors: Minhua Zhang's Weld Capital Management, D. E. Shaw's D E Shaw, and Bruce Kovner's Caxton Associates LP.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Qiwi PLC (NASDAQ:QIWI) but similarly valued. We will take a look at ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), Tufin Software Technologies Ltd. (NYSE:TUFN), Hyster-Yale Materials Handling Inc (NYSE:HY), and Carbonite Inc (NASDAQ:CARB). This group of stocks' market values are closest to QIWI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZIOP,12,141596,6 TUFN,6,34868,6 HY,12,35777,1 CARB,19,125272,-1 Average,12.25,84378,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $105 million in QIWI's case. Carbonite Inc (NASDAQ:CARB) is the most popular stock in this table. On the other hand Tufin Software Technologies Ltd. (NYSE:TUFN) is the least popular one with only 6 bullish hedge fund positions. Qiwi PLC (NASDAQ:QIWI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on QIWI as the stock returned 13.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.