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Is BILI A Good Stock To Buy According To Hedge Funds?

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Abigail Fisher
·6 min read
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At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Bilibili Inc. (NASDAQ:BILI) makes for a good investment right now.

Is BILI a good stock to buy? Bilibili Inc. (NASDAQ:BILI) was in 37 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. BILI investors should pay attention to an increase in activity from the world's largest hedge funds in recent months. There were 29 hedge funds in our database with BILI positions at the end of the second quarter. Our calculations also showed that BILI isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

BRIDGEWATER ASSOCIATES
BRIDGEWATER ASSOCIATES

Ray Dalio of Bridgewater Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's review the recent hedge fund action surrounding Bilibili Inc. (NASDAQ:BILI).

Do Hedge Funds Think BILI Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BILI over the last 21 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

The largest stake in Bilibili Inc. (NASDAQ:BILI) was held by Yiheng Capital, which reported holding $277.3 million worth of stock at the end of September. It was followed by Alkeon Capital Management with a $180.4 million position. Other investors bullish on the company included Hillhouse Capital Management, Renaissance Technologies, and Cartica Management. In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Bilibili Inc. (NASDAQ:BILI), around 16.7% of its 13F portfolio. Cartica Management is also relatively very bullish on the stock, earmarking 13.7 percent of its 13F equity portfolio to BILI.

As one would reasonably expect, key money managers have jumped into Bilibili Inc. (NASDAQ:BILI) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable position in Bilibili Inc. (NASDAQ:BILI). Balyasny Asset Management had $11.4 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also made a $10.5 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Matthew Hulsizer's PEAK6 Capital Management, and Andrew Dalrymple and Barry McCorkell's Aubrey Capital Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Bilibili Inc. (NASDAQ:BILI) but similarly valued. These stocks are Masco Corporation (NYSE:MAS), Livongo Health, Inc. (NASDAQ:LVGO), Pioneer Natural Resources Company (NYSE:PXD), HEICO Corporation (NYSE:HEI), Catalent Inc (NYSE:CTLT), Brookfield Infrastructure Partners L.P. (NYSE:BIP), and Tiffany & Co. (NYSE:TIF). All of these stocks' market caps resemble BILI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAS,46,878967,6 LVGO,56,1497348,20 PXD,42,269938,7 HEI,43,712400,-3 CTLT,40,618061,5 BIP,13,50744,1 TIF,61,2294401,-3 Average,43,903123,4.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $903 million. That figure was $1024 million in BILI's case. Tiffany & Co. (NYSE:TIF) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 13 bullish hedge fund positions. Bilibili Inc. (NASDAQ:BILI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BILI is 65. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on BILI as the stock returned 103.6% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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