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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Dada Nexus Limited (NASDAQ:DADA).
Dada Nexus Limited (NASDAQ:DADA) has seen a decrease in hedge fund interest in recent months. Dada Nexus Limited (NASDAQ:DADA) was in 21 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 25. There were 25 hedge funds in our database with DADA positions at the end of the fourth quarter. Our calculations also showed that DADA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To most investors, hedge funds are seen as underperforming, outdated investment tools of years past. While there are greater than 8000 funds in operation at the moment, Our researchers look at the bigwigs of this club, approximately 850 funds. These money managers shepherd most of the smart money's total asset base, and by paying attention to their first-class picks, Insider Monkey has determined numerous investment strategies that have historically surpassed the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. 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 .
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
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Do Hedge Funds Think DADA Is A Good Stock To Buy Now?
At first quarter's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DADA over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Kylin Management was the largest shareholder of Dada Nexus Limited (NASDAQ:DADA), with a stake worth $31.9 million reported as of the end of March. Trailing Kylin Management was CaaS Capital, which amassed a stake valued at $20.8 million. Rokos Capital Management, Citadel Investment Group, and Hunt Lane Capital 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 Kylin Management allocated the biggest weight to Dada Nexus Limited (NASDAQ:DADA), around 9.32% of its 13F portfolio. Hunt Lane Capital is also relatively very bullish on the stock, earmarking 3.09 percent of its 13F equity portfolio to DADA.
Seeing as Dada Nexus Limited (NASDAQ:DADA) has faced falling interest from the smart money, we can see that there lies a certain "tier" of money managers that decided to sell off their entire stakes in the first quarter. It's worth mentioning that Richard Driehaus's Driehaus Capital cut the biggest stake of the 750 funds watched by Insider Monkey, worth close to $18.2 million in stock. D. E. Shaw's fund, D E Shaw, also sold off its stock, about $17.3 million worth. These moves are interesting, as total hedge fund interest fell by 4 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Dada Nexus Limited (NASDAQ:DADA). We will take a look at Landstar System, Inc. (NASDAQ:LSTR), Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Elbit Systems Ltd. (NASDAQ:ESLT), Pan American Silver Corp. (NASDAQ:PAAS), YETI Holdings, Inc. (NYSE:YETI), BlackLine, Inc. (NASDAQ:BL), and Terminix Global Holdings, Inc. (NYSE:TMX). This group of stocks' market caps are closest to DADA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSTR,15,166365,-3 IONS,23,541031,-5 ESLT,3,50211,-2 PAAS,27,352324,0 YETI,30,159366,11 BL,24,271832,1 TMX,27,456007,-3 Average,21.3,285305,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $158 million in DADA's case. YETI Holdings, Inc. (NYSE:YETI) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 3 bullish hedge fund positions. Dada Nexus Limited (NASDAQ:DADA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DADA is 59.5. 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 DADA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DADA investors were disappointed as the stock returned -7.1% 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.