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With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was WiMi Hologram Cloud Inc. (NASDAQ:WIMI).
WiMi Hologram Cloud Inc. (NASDAQ:WIMI) has seen an increase in support from the world's most elite money managers recently. WiMi Hologram Cloud Inc. (NASDAQ:WIMI) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WIMI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Wall Street Bull
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a peek at the recent hedge fund action surrounding WiMi Hologram Cloud Inc. (NASDAQ:WIMI).
Do Hedge Funds Think WIMI Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in WIMI a year ago. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Sabby Capital held the most valuable stake in WiMi Hologram Cloud Inc. (NASDAQ:WIMI), which was worth $6.5 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $0.3 million worth of shares. Paloma Partners, Millennium Management, and Millennium Management 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 Sabby Capital allocated the biggest weight to WiMi Hologram Cloud Inc. (NASDAQ:WIMI), around 1.26% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to WIMI.
As aggregate interest increased, some big names have been driving this bullishness. Sabby Capital, managed by Hal Mintz, created the most valuable position in WiMi Hologram Cloud Inc. (NASDAQ:WIMI). Sabby Capital had $6.5 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The other funds with brand new WIMI positions are Ken Griffin's Citadel Investment Group and Jim Simons (founder)'s Renaissance Technologies.
Let's go over hedge fund activity in other stocks similar to WiMi Hologram Cloud Inc. (NASDAQ:WIMI). We will take a look at CRA International, Inc. (NASDAQ:CRAI), Evelo Biosciences, Inc. (NASDAQ:EVLO), Titan International Inc (NYSE:TWI), Consolidated Communications Holdings Inc (NASDAQ:CNSL), Allot Ltd. (NASDAQ:ALLT), Evolus, Inc. (NASDAQ:EOLS), and Conn's, Inc. (NASDAQ:CONN). This group of stocks' market caps match WIMI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRAI,14,59563,-1 EVLO,5,3818,2 TWI,20,150026,1 CNSL,12,45296,-1 ALLT,13,190113,-1 EOLS,7,13562,-3 CONN,12,40397,1 Average,11.9,71825,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $7 million in WIMI's case. Titan International Inc (NYSE:TWI) is the most popular stock in this table. On the other hand Evelo Biosciences, Inc. (NASDAQ:EVLO) is the least popular one with only 5 bullish hedge fund positions. WiMi Hologram Cloud Inc. (NASDAQ:WIMI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WIMI is 41.3. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately WIMI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WIMI investors were disappointed as the stock returned -13% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.