The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards SINA Corp (NASDAQ:SINA).
SINA Corp (NASDAQ:SINA) shareholders have witnessed a decrease in hedge fund interest of late. SINA was in 21 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 24 hedge funds in our database with SINA positions at the end of the previous quarter. Our calculations also showed that SINA isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's take a look at the latest hedge fund action regarding SINA Corp (NASDAQ:SINA).
What does the smart money think about SINA Corp (NASDAQ:SINA)?
Heading into the first quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. By comparison, 34 hedge funds held shares or bullish call options in SINA a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in SINA Corp (NASDAQ:SINA) was held by Platinum Asset Management, which reported holding $190 million worth of stock at the end of September. It was followed by D E Shaw with a $63.5 million position. Other investors bullish on the company included Tairen Capital, HBK Investments, and Renaissance Technologies.
Judging by the fact that SINA Corp (NASDAQ:SINA) has faced a decline in interest from the smart money, it's safe to say that there exists a select few hedgies that elected to cut their positions entirely in the third quarter. It's worth mentioning that Thomas Steyer's Farallon Capital said goodbye to the largest investment of all the hedgies watched by Insider Monkey, worth an estimated $78.1 million in stock. Panayotis Takis Sparaggis's fund, Alkeon Capital Management, also dropped its stock, about $54.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to SINA Corp (NASDAQ:SINA). These stocks are Nuance Communications Inc. (NASDAQ:NUAN), YY Inc (NASDAQ:YY), DCP Midstream LP (NYSE:DCP), and Sea Limited (NYSE:SE). This group of stocks' market valuations are closest to SINA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NUAN,35,290246,15 YY,24,149051,-1 DCP,5,18039,0 SE,14,335436,-4 Average,19.5,198193,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $440 million in SINA's case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 5 bullish hedge fund positions. SINA Corp (NASDAQ:SINA) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on SINA, though not to the same extent, as the stock returned 20.8% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.