The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Bilibili Inc. (NASDAQ:BILI) and determine whether the smart money was really smart about this stock.
Bilibili Inc. (NASDAQ:BILI) shareholders have witnessed an increase in hedge fund interest of late. Bilibili Inc. (NASDAQ:BILI) was in 29 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BILI isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Lei Zhang Hillhouse Capital
Lei Zhang of Hillhouse Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind we're going to go over the key hedge fund action regarding Bilibili Inc. (NASDAQ:BILI).
What does smart money think about Bilibili Inc. (NASDAQ:BILI)?
Heading into the third quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the first quarter of 2020. On the other hand, there were a total of 23 hedge funds with a bullish position in BILI a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Hillhouse Capital Management was the largest shareholder of Bilibili Inc. (NASDAQ:BILI), with a stake worth $421.6 million reported as of the end of September. Trailing Hillhouse Capital Management was Yiheng Capital, which amassed a stake valued at $308.7 million. Renaissance Technologies, Alkeon Capital Management, and Jericho Capital Asset 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 Yiheng Capital allocated the biggest weight to Bilibili Inc. (NASDAQ:BILI), around 15.39% of its 13F portfolio. Cartica Management is also relatively very bullish on the stock, designating 11.54 percent of its 13F equity portfolio to BILI.
As one would reasonably expect, key money managers were breaking ground themselves. Voleon Capital, managed by Michael Kharitonov and Jon David McAuliffe, assembled the biggest position in Bilibili Inc. (NASDAQ:BILI). Voleon Capital had $23.2 million invested in the company at the end of the quarter. Ted Kang's Kylin Management also made a $12.1 million investment in the stock during the quarter. The following funds were also among the new BILI investors: Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Yi Xin's Ariose Capital, and Mike Ogborne's Ogborne Capital.
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 Hess Corporation (NYSE:HES), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Arista Networks Inc (NYSE:ANET), Baker Hughes Company (NYSE:BKR), Agnico Eagle Mines Limited (NYSE:AEM), ORIX Corporation (NYSE:IX), and Trip.com Group Limited (NASDAQ:TCOM). This group of stocks' market valuations resemble BILI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HES,28,335349,0 TTWO,61,1412613,-5 ANET,33,510414,9 BKR,27,403640,-3 AEM,30,594031,5 IX,4,3765,0 TCOM,29,1235313,-2 Average,30.3,642161,0.6 [/table]
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $642 million. That figure was $1375 million in BILI's case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 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 61.9. 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 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately BILI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BILI investors were disappointed as the stock returned -5.1% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
