Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The fourth quarter of 2018 is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 7 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Qiwi PLC (NASDAQ:QIWI).
Qiwi PLC (NASDAQ:QIWI) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 8 hedge funds' portfolios at the end of the fourth quarter of 2018. At the end of this article we will also compare QIWI to other stocks including Bain Capital Specialty Finance, Inc. (NYSE:BCSF), Standex International Corporation (NYSE:SXI), and Intersect ENT Inc (NASDAQ:XENT) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 32 percentage points since May 2014 through March 12, 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.
We're going to go over the latest hedge fund action surrounding Qiwi PLC (NASDAQ:QIWI).
Hedge fund activity in Qiwi PLC (NASDAQ:QIWI)
At the end of the fourth quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in QIWI a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Qiwi PLC (NASDAQ:QIWI) was held by Melqart Asset Management, which reported holding $51.6 million worth of stock at the end of December. It was followed by Platinum Asset Management with a $29.9 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Arrowstreet Capital.
Seeing as Qiwi PLC (NASDAQ:QIWI) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of fund managers that slashed their positions entirely in the third quarter. At the top of the heap, Mike Vranos's Ellington cut the biggest stake of all the hedgies monitored by Insider Monkey, valued at about $0.2 million in stock. Matthew Tewksbury's fund, Stevens Capital Management, also said goodbye to its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Qiwi PLC (NASDAQ:QIWI) but similarly valued. These stocks are Bain Capital Specialty Finance, Inc. (NYSE:BCSF), Standex International Corporation (NYSE:SXI), Intersect ENT Inc (NASDAQ:XENT), and Methode Electronics Inc. (NYSE:MEI). This group of stocks' market valuations are closest to QIWI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BCSF,3,27479,3 SXI,8,13557,-4 XENT,20,214979,-2 MEI,7,68643,-4 Average,9.5,81165,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $96 million in QIWI's case. Intersect ENT Inc (NASDAQ:XENT) is the most popular stock in this table. On the other hand Bain Capital Specialty Finance, Inc. (NYSE:BCSF) is the least popular one with only 3 bullish hedge fund positions. Qiwi PLC (NASDAQ:QIWI) is not the least popular stock in this group but hedge fund interest is still below average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately QIWI wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); QIWI investors were disappointed as the stock returned 0.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.