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In this article you are going to find out whether hedge funds think China Yuchai International Limited (NYSE:CYD) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Hedge fund interest in China Yuchai International Limited (NYSE:CYD) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as HarborOne Bancorp, Inc. (NASDAQ:HONE), Interface, Inc. (NASDAQ:TILE), and Donegal Group Inc (NASDAQ:DGICA) to gather more data points. Our calculations also showed that CYD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are tons of tools investors have at their disposal to appraise stocks. Some of the most under-the-radar tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outperform the market by a significant margin (see the details here).
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Bruce Kovner of Caxton Associates LP[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to review the fresh hedge fund action encompassing China Yuchai International Limited (NYSE:CYD).
What have hedge funds been doing with China Yuchai International Limited (NYSE:CYD)?
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in CYD a year ago. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in China Yuchai International Limited (NYSE:CYD) was held by Shah Capital Management, which reported holding $41.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $5.8 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Shah Capital Management allocated the biggest weight to China Yuchai International Limited (NYSE:CYD), around 32.93% of its 13F portfolio. Bourgeon Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CYD.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Caxton Associates LP. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Bourgeon Capital).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as China Yuchai International Limited (NYSE:CYD) but similarly valued. These stocks are HarborOne Bancorp, Inc. (NASDAQ:HONE), Interface, Inc. (NASDAQ:TILE), Donegal Group Inc (NASDAQ:DGICA), and Mobileiron Inc (NASDAQ:MOBL). This group of stocks' market caps are closest to CYD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HONE,12,28959,-1 TILE,15,17906,-5 DGICA,5,10086,0 MOBL,15,110592,-3 Average,11.75,41886,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $50 million in CYD's case. Interface, Inc. (NASDAQ:TILE) is the most popular stock in this table. On the other hand Donegal Group Inc (NASDAQ:DGICA) is the least popular one with only 5 bullish hedge fund positions. China Yuchai International Limited (NYSE:CYD) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on CYD as the stock returned 28.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.