Do Hedge Funds Love HUTCHMED (China) Limited (HCM)?

·6 分鐘文章

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards HUTCHMED (China) Limited (NASDAQ:HCM).

HUTCHMED (China) Limited (NASDAQ:HCM) has experienced an increase in support from the world's most elite money managers lately. HUTCHMED (China) Limited (NASDAQ:HCM) was in 10 hedge funds' portfolios at the end of June. The all time high for this statistic is 23. There were 8 hedge funds in our database with HCM positions at the end of the first quarter. Our calculations also showed that HCM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.


James Dinan of York Capital Management

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

Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in HCM a year ago. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Sander Gerber's Hudson Bay Capital Management has the largest position in HUTCHMED (China) Limited (NASDAQ:HCM), worth close to $15.4 million, amounting to 0.2% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $11.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish consist of Renaissance Technologies, James Dinan's York Capital Management and Matthew L Pinz's Pinz Capital. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to HUTCHMED (China) Limited (NASDAQ:HCM), around 1.88% of its 13F portfolio. York Capital Management is also relatively very bullish on the stock, earmarking 0.8 percent of its 13F equity portfolio to HCM.

As industrywide interest jumped, some big names have jumped into HUTCHMED (China) Limited (NASDAQ:HCM) headfirst. York Capital Management, managed by James Dinan, assembled the largest position in HUTCHMED (China) Limited (NASDAQ:HCM). York Capital Management had $7.2 million invested in the company at the end of the quarter. Matthew L Pinz's Pinz Capital also made a $6.3 million investment in the stock during the quarter. The following funds were also among the new HCM investors: Run Ye, Junji Takegami and Hoyon Hwang's Tiger Pacific Capital and Ken Griffin's Citadel Investment Group.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as HUTCHMED (China) Limited (NASDAQ:HCM) but similarly valued. We will take a look at The Descartes Systems Group Inc (NASDAQ:DSGX), Healthcare Trust Of America Inc (NYSE:HTA), South State Corporation (NASDAQ:SSB), Nordstrom, Inc. (NYSE:JWN), Shell Midstream Partners LP (NYSE:SHLX), Unum Group (NYSE:UNM), and Ardagh Group S.A. (NYSE:ARD). This group of stocks' market values are closest to HCM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DSGX,15,307454,4 HTA,23,226444,6 SSB,18,298543,-6 JWN,31,445649,-3 SHLX,4,32323,0 UNM,23,324091,-10 ARD,13,135477,2 Average,18.1,252854,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $60 million in HCM's case. Nordstrom, Inc. (NYSE:JWN) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 4 bullish hedge fund positions. HUTCHMED (China) Limited (NASDAQ:HCM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HCM is 31.2. 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately HCM wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HCM investors were disappointed as the stock returned -5% since the end of June (through 9/27) 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.