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Hedge Funds Are Selling JD.Com Inc (JD)

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  • JD

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of JD.Com Inc (NASDAQ:JD) based on that data.

Is JD.Com Inc (NASDAQ:JD) a healthy stock for your portfolio? Hedge funds were in a pessimistic mood. The number of long hedge fund bets decreased by 10 recently. JD.Com Inc (NASDAQ:JD) was in 66 hedge funds' portfolios at the end of September. The all time high for this statistic is 90. Our calculations also showed that JD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to view the latest hedge fund action surrounding JD.Com Inc (NASDAQ:JD).

Bill Miller
Bill Miller

Bill Miller of Miller Value Partners

Do Hedge Funds Think JD Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 66 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in JD over the last 25 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Tiger Global Management LLC, managed by Chase Coleman, holds the most valuable position in JD.Com Inc (NASDAQ:JD). Tiger Global Management LLC has a $3.6943 billion position in the stock, comprising 7.1% of its 13F portfolio. Coming in second is D1 Capital Partners, managed by Daniel Sundheim, which holds a $1.2851 billion position; the fund has 7.2% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain Philippe Laffont's Coatue Management, Andreas Halvorsen's Viking Global and Ken Fisher's Fisher Asset Management. In terms of the portfolio weights assigned to each position Kylin Management allocated the biggest weight to JD.Com Inc (NASDAQ:JD), around 27.89% of its 13F portfolio. Kontiki Capital is also relatively very bullish on the stock, setting aside 24.66 percent of its 13F equity portfolio to JD.

Judging by the fact that JD.Com Inc (NASDAQ:JD) has experienced falling interest from the smart money, it's safe to say that there exists a select few money managers that elected to cut their positions entirely heading into Q4. Interestingly, Gabriel Plotkin's Melvin Capital Management cut the largest stake of the 750 funds followed by Insider Monkey, worth close to $379.1 million in stock, and Benjamin A. Smith's Laurion Capital Management was right behind this move, as the fund dropped about $257.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 10 funds heading into Q4.

Let's go over hedge fund activity in other stocks similar to JD.Com Inc (NASDAQ:JD). These stocks are CVS Health Corporation (NYSE:CVS), Target Corporation (NYSE:TGT), Anheuser-Busch InBev SA/NV (NYSE:BUD), Square, Inc. (NYSE:SQ), The Estee Lauder Companies Inc (NYSE:EL), Rio Tinto Group (NYSE:RIO), and HSBC Holdings plc (NYSE:HSBC). This group of stocks' market caps are similar to JD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVS,61,1060624,-6 TGT,49,4349899,-17 BUD,11,826303,-7 SQ,98,8884931,4 EL,49,4137243,-1 RIO,20,1330364,-1 HSBC,10,196426,-1 Average,42.6,2969399,-4.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.6 hedge funds with bullish positions and the average amount invested in these stocks was $2969 million. That figure was $9057 million in JD's case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 10 bullish hedge fund positions. JD.Com Inc (NASDAQ:JD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JD is 48.8. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on JD as the stock returned 16.4% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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