The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors' filings. In this article, we analyze how these elite funds and prominent investors traded YY Inc (NASDAQ:YY) based on those filings.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_746830" align="aligncenter" width="473"] Matthew Hulsizer of PEAK6 Capital[/caption]
Let's take a look at the fresh hedge fund action encompassing YY Inc (NASDAQ:YY).
Hedge fund activity in YY Inc (NASDAQ:YY)
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the fourth quarter of 2018. By comparison, 21 hedge funds held shares or bullish call options in YY a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in YY Inc (NASDAQ:YY). Citadel Investment Group has a $28.5 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which holds a $24.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions encompass Israel Englander's Millennium Management, Noam Gottesman's GLG Partners and Panayotis Takis Sparaggis's Alkeon Capital Management.
Because YY Inc (NASDAQ:YY) has experienced falling interest from the smart money, we can see that there was a specific group of funds who sold off their positions entirely by the end of the third quarter. Interestingly, Anthony Bozza's Lakewood Capital Management sold off the largest stake of the 700 funds followed by Insider Monkey, totaling about $24.8 million in stock. Sahm Adrangi's fund, Kerrisdale Capital, also cut its stock, about $13.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as YY Inc (NASDAQ:YY) but similarly valued. We will take a look at WABCO Holdings Inc. (NYSE:WBC), World Wrestling Entertainment, Inc. (NYSE:WWE), Grupo Televisa SAB (NYSE:TV), and American Homes 4 Rent (NYSE:AMH). This group of stocks' market values resemble YY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WBC,36,801213,22 WWE,47,1022250,13 TV,16,889924,2 AMH,19,462109,1 Average,29.5,793874,9.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $794 million. That figure was $130 million in YY's case. World Wrestling Entertainment, Inc. (NYSE:WWE) is the most popular stock in this table. On the other hand Grupo Televisa SAB (NYSE:TV) is the least popular one with only 16 bullish hedge fund positions. YY Inc (NASDAQ:YY) 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately YY wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); YY investors were disappointed as the stock returned -16.4% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.