How do you choose the next stock to invest in? One way would be to spend days researching and searching through thousands of publicly traded companies. An easier way, however, is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors tend to invest a lot of capital and need to do due diligence when choosing their next pick. They don’t always get it right, but on average, their stock selections have historically produced strong returns after adjusting for known risk factors. With that in mind, let’s take a look at recent hedge fund activity around NetEase, Inc (NASDAQ:NTES).
NetEase, Inc. (NASDAQ:NTES) Shareholders have recently seen a decline in support from the world’s most elite wealth managers. NetEase, Inc. (NASDAQ:NTES) was in 32 hedge fund portfolios at the end of March. The all-time high of this statistic is 49. Our calculations have also shown that NTES is not one of the The 30 most popular stocks among hedge funds (Click for the Q1 ranking).
In the eyes of most shareholders, hedge funds are considered slow, outdated investment vehicles of the past. While there are currently over 8,000 funds open their doors, our researchers are looking at the moguls of this club, around 850 funds. These investment professionals manage most of the total capital of smart money, and by tracking their inimitable stock picks, Insider Monkey has discovered several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since their launch in March 2017. In addition, our monthly newsletter’s long stock selection portfolio returned 206.8% since March 2017 (through May 2021), outperforming the S&P 500 index by more than 115 percentage points. You can download a sample copy of this newsletter on our website .
William Gray from Orbis Investment Management
At Insider Monkey, we search multiple sources to discover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we look at such stock prices emerging lithium stock. We go lists like 10. by best EV stocks to pick the next Tesla that delivers a 10x return. While we recommend positions in just a tiny fraction of the companies we analyze, we review as many stocks as possible. We read letters from hedge fund investors and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With that in mind, let’s see the top hedge fund promotions related to NetEase, Inc (NASDAQ:NTES).
Do hedge funds think NTES is a good stock to buy now?
At the beginning of the second quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were long on this stock, a change of -16% from the fourth quarter of 2020. This compares with 39 hedge funds holding stocks or bullish call options in NTES a year ago. So let’s take a look at which hedge funds were among the top holders in the stock and which hedge funds were making big strides.
Among these funds, Orbis investment management held its most valuable stake in NetEase, Inc (NASDAQ: NTES), valued at $ 6 million at the end of the fourth quarter of 1889.6 million. Second was GQG Partners, which amassed $ 453.9 million in shares. Melvin Capital Management, Renaissance Technologies, and Fisher Asset Management were also very fond of the stock and became one of the company’s largest hedge fund owners. In terms of the portfolio weights assigned to each position, Orbis Investment Management assigns the largest weighting to NetEase, Inc (NASDAQ: NTES) at approximately 13.51% of its 13F portfolio. Kerrisdale capital is also relatively bullish on the stock, dedicating 2.92 percent of its 13F stock portfolio to NTES.
Since NetEase, Inc (NASDAQ: NTES) has seen bearish sentiment due to smart money, it’s easy to see that there was a certain group of hedgies that cut their overall stakes in the second quarter. Top of the pile, Brandon Haleys Holocene advisor the largest “upper crust” position in Insider Monkey-supervised funds with nearly $ 74.1 million in shares, and James Parsons’ Junto Capital Management was right behind this move as the fund moved from around $ 26 million in value. Passed $ 7 million. These steps are important to note as the total hedge fund interest was reduced by 6 funds at the beginning of the second quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NetEase, Inc (NASDAQ: NTES), but similarly valued. We will join Chubb Limited (NYSE:CB), Becton, Dickinson and Company (NYSE:BDX), Illinois Tool Works Inc. (NYSE:ITW), Norfolk Southern Corp. (NYSE:NSC), KE Holdings Inc (NYSE:BEKE), Dell Technologies Inc. (NYSE:DELL) and Brookfield Asset Management Inc. (NYSE:BAM). The market values of this group of stocks are similar to the market value of NTES.
[table] Ticker, number of HRs with positions, total value of HR positions (x1000), change in HR position CB, 41.1605208.7 BDX, 65.3732947.0 ITW, 33.411615, -7 NSC, 46.898621.2 BEKE, 33.2308833.3 DELL, 54.4834607.4 BAM, 34.1388352, -4 average, 43.7.2168598.0.7 [/table]
See table here when formatting problems occur.
As you can see, these stocks had an average of 43.7 hedge funds with bullish positions and the average amount invested in these stocks was $ 2,169 million. In the case of NTES, it was $ 3,501 million. Becton, Dickinson and Company (NYSE:BDX) is the most popular stock in this table. On the other hand, Illinois Tool Works Inc. (NYSE:ITW) is the least popular with only 33 bullish hedge fund positions. Compared to these stocks, NetEase, Inc (NASDAQ: NTES) is even less popular than ITW. Our hedge fund sentiment score for NTES is 18.6. Stocks with a higher number of hedge fund positions relative to other stocks and relative to their historical range receive a higher sentiment score. Our calculations have shown that Top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 40 percentage points. These stocks rose 22.8% through July 2 in 2021, but managed to beat the market by 6 percentage points. A small number of hedge funds were also right in betting on NTES, albeit not to the same extent, as the stock has returned 10% since late March (through July 2nd) and also outperformed the market.
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Disclosure: None. This article was originally published at Insider monkey.