Is Baozun Inc (NASDAQ:BZUN) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Baozun Inc (NASDAQ:BZUN) a bargain? Money managers are reducing their bets on the stock. The number of long hedge fund bets dropped by 1 recently. Our calculations also showed that BZUN isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are viewed as unimportant, old financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, Our researchers hone in on the top tier of this club, around 750 funds. It is estimated that this group of investors command the majority of the smart money's total asset base, and by monitoring their finest equity investments, Insider Monkey has spotted many investment strategies that have historically outrun the broader indices. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
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 gander at the fresh hedge fund action surrounding Baozun Inc (NASDAQ:BZUN).
What does smart money think about Baozun Inc (NASDAQ:BZUN)?
At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BZUN over the last 16 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.
The largest stake in Baozun Inc (NASDAQ:BZUN) was held by Kylin Management, which reported holding $32.6 million worth of stock at the end of March. It was followed by Indus Capital with a $28.1 million position. Other investors bullish on the company included Citadel Investment Group, HBK Investments, and Citadel Investment Group.
Because Baozun Inc (NASDAQ:BZUN) has experienced falling interest from the smart money, we can see that there is a sect of hedgies who sold off their entire stakes heading into Q3. It's worth mentioning that Louis Bacon's Moore Global Investments said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, totaling close to $14.5 million in stock. Gavin Saitowitz and Cisco J. del Valle's fund, Springbok Capital, also cut its stock, about $0.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q3.
Let's check out hedge fund activity in other stocks similar to Baozun Inc (NASDAQ:BZUN). We will take a look at 8x8, Inc. (NYSE:EGHT), Inphi Corporation (NYSE:IPHI), Revolve Group, Inc. (NYSE:RVLV), and Covanta Holding Corporation (NYSE:CVA). This group of stocks' market caps match BZUN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGHT,20,476772,0 IPHI,26,219588,5 RVLV,15,52196,15 CVA,15,102764,-3 Average,19,212830,4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $91 million in BZUN's case. Inphi Corporation (NYSE:IPHI) is the most popular stock in this table. On the other hand Revolve Group, Inc. (NYSE:RVLV) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Baozun Inc (NASDAQ:BZUN) is even less popular than RVLV. Hedge funds dodged a bullet by taking a bearish stance towards BZUN. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BZUN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BZUN investors were disappointed as the stock returned -14.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.