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Hedge Funds Have Never Been This Bullish On Sea Limited (SE)

Nina Todic

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31, so let’s proceed with the discussion of the hedge fund sentiment on Sea Limited (NYSE:SE).

Sea Limited (NYSE:SE) was in 50 hedge funds' portfolios at the end of March. SE has experienced an increase in activity from the world's largest hedge funds of late. There were 14 hedge funds in our database with SE positions at the end of the previous quarter. Our calculations also showed that se isn't among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

FARALLON CAPITAL

Let's take a look at the key hedge fund action surrounding Sea Limited (NYSE:SE).

Hedge fund activity in Sea Limited (NYSE:SE)

At the end of the first quarter, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 257% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in SE over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with SE Positions

Among these funds, Tiger Global Management held the most valuable stake in Sea Limited (NYSE:SE), which was worth $319.8 million at the end of the first quarter. On the second spot was Hillhouse Capital Management which amassed $248 million worth of shares. Moreover, Jericho Capital Asset Management, Lone Pine Capital, and Farallon Capital were also bullish on Sea Limited (NYSE:SE), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, some big names have jumped into Sea Limited (NYSE:SE) headfirst. Hillhouse Capital Management, managed by Lei Zhang, assembled the largest position in Sea Limited (NYSE:SE). Hillhouse Capital Management had $248 million invested in the company at the end of the quarter. Thomas Steyer's Farallon Capital also made a $162.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Glen Kacher's Light Street Capital, D. E. Shaw's D E Shaw, and Jim Simons's Renaissance Technologies.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Sea Limited (NYSE:SE) but similarly valued. We will take a look at Spirit AeroSystems Holdings, Inc. (NYSE:SPR), AGNC Investment Corp. (NASDAQ:AGNC), Targa Resources Corp (NYSE:TRGP), and UGI Corp (NYSE:UGI). This group of stocks' market values resemble SE's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPR,29,2186164,-3 AGNC,15,233055,-6 TRGP,23,334534,-12 UGI,20,441954,-4 Average,21.75,798927,-6.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $799 million. That figure was $2179 million in SE's case. Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is the most popular stock in this table. On the other hand AGNC Investment Corp. (NASDAQ:AGNC) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Sea Limited (NYSE:SE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on SE as the stock returned 20.6% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.

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