The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded JOYY Inc. (NASDAQ:YY) based on those filings.
Is JOYY Inc. (NASDAQ:YY) undervalued? Hedge funds are selling. The number of long hedge fund bets decreased by 8 recently. Our calculations also showed that YY 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). YY was in 15 hedge funds' portfolios at the end of March. There were 23 hedge funds in our database with YY holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are perceived as unimportant, outdated investment vehicles of the past. While there are over 8000 funds with their doors open at present, Our experts hone in on the masters of this group, about 850 funds. It is estimated that this group of investors handle the lion's share of the hedge fund industry's total capital, and by keeping an eye on their unrivaled equity investments, Insider Monkey has revealed a number of investment strategies that have historically exceeded the broader indices. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_25427" align="aligncenter" width="392"] Julian Robertson of Tiger Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, We take a look at lists like the 10 stocks that went up during the 2008 crash to identify the companies that are likely to deliver double digit returns in up and down markets. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the latest hedge fund action surrounding JOYY Inc. (NASDAQ:YY).
What does smart money think about JOYY Inc. (NASDAQ:YY)?
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -35% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position 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.
Among these funds, Sylebra Capital Management held the most valuable stake in JOYY Inc. (NASDAQ:YY), which was worth $96.6 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $47.8 million worth of shares. Keywise Capital Management, Citadel Investment Group, and Springbok Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Keywise Capital Management allocated the biggest weight to JOYY Inc. (NASDAQ:YY), around 8.03% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, designating 3.96 percent of its 13F equity portfolio to YY.
Since JOYY Inc. (NASDAQ:YY) has faced falling interest from hedge fund managers, it's easy to see that there was a specific group of funds that decided to sell off their positions entirely last quarter. At the top of the heap, Run Ye, Junji Takegami and Hoyon Hwang's Tiger Pacific Capital said goodbye to the biggest position of all the hedgies watched by Insider Monkey, comprising about $13.2 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund dropped about $8.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as JOYY Inc. (NASDAQ:YY) but similarly valued. We will take a look at LPL Financial Holdings Inc (NASDAQ:LPLA), Cousins Properties Incorporated (NYSE:CUZ), Signature Bank (NASDAQ:SBNY), and JBG SMITH Properties (NYSE:JBGS). This group of stocks' market values match YY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPLA,33,747511,-8 CUZ,22,76929,10 SBNY,19,262247,-2 JBGS,20,318961,1 Average,23.5,351412,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $351 million. That figure was $209 million in YY's case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand Signature Bank (NASDAQ:SBNY) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks JOYY Inc. (NASDAQ:YY) is even less popular than SBNY. Hedge funds clearly dropped the ball on YY as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on YY as the stock returned 77.2% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.