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Here’s What Hedge Funds Think About Uxin Limited (UXIN)

Reymerlyn Martin

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Is Uxin Limited (NASDAQ:UXIN) undervalued? The best stock pickers are turning bullish. The number of bullish hedge fund bets went up by 1 in recent months. Our calculations also showed that UXIN isn't among the 30 most popular stocks among hedge funds. UXIN was in 6 hedge funds' portfolios at the end of December. There were 5 hedge funds in our database with UXIN holdings at the end of the previous quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

TIGER GLOBAL Investor Letter

We're going to check out the fresh hedge fund action encompassing Uxin Limited (NASDAQ:UXIN).

How have hedgies been trading Uxin Limited (NASDAQ:UXIN)?

At Q4's end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in UXIN a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

UXIN_apr2019

The largest stake in Uxin Limited (NASDAQ:UXIN) was held by Hillhouse Capital Management, which reported holding $108.1 million worth of stock at the end of December. It was followed by Tiger Global Management LLC with a $92.3 million position. Other investors bullish on the company included Nishkama Capital, Tudor Investment Corp, and Citadel Investment Group.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Nishkama Capital, managed by Ravee Mehta, created the largest position in Uxin Limited (NASDAQ:UXIN). Nishkama Capital had $0.4 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Ken Griffin's Citadel Investment Group.

Let's now take a look at hedge fund activity in other stocks similar to Uxin Limited (NASDAQ:UXIN). We will take a look at Aphria Inc. (NYSE:APHA), Mobile Mini Inc (NASDAQ:MINI), Inphi Corporation (NYSE:IPHI), and Scholastic Corp (NASDAQ:SCHL). This group of stocks' market valuations are closest to UXIN's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APHA,6,4723,6 MINI,15,78021,2 IPHI,21,116576,7 SCHL,13,93687,2 Average,13.75,73252,4.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $202 million in UXIN's case. Inphi Corporation (NYSE:IPHI) is the most popular stock in this table. On the other hand Aphria Inc. (NYSE:APHA) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Uxin Limited (NASDAQ:UXIN) is even less popular than APHA. Hedge funds dodged a bullet by taking a bearish stance towards UXIN. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately UXIN wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); UXIN investors were disappointed as the stock returned -28.2% 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.

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