Hedge Funds Aren’t Done Buying Bilibili Inc. (BILI)

·6 min read

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Bilibili Inc. (NASDAQ:BILI).

Is Bilibili Inc. (NASDAQ:BILI) a healthy stock for your portfolio? Hedge funds were getting more bullish. The number of long hedge fund positions moved up by 7 lately. Bilibili Inc. (NASDAQ:BILI) was in 53 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 46. 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 Q1 rankings).

Today there are numerous formulas stock traders use to analyze publicly traded companies. Two of the less known formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a superb margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Lei Zhang Hillhouse Capital
Lei Zhang Hillhouse Capital

Lei Zhang of Hillhouse Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $29 biotech stock for $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. Keeping this in mind let's take a peek at the recent hedge fund action regarding Bilibili Inc. (NASDAQ:BILI).

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

At Q1's end, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BILI over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BILI A Good Stock To Buy?
Is BILI A Good Stock To Buy?

More specifically, Yiheng Capital was the largest shareholder of Bilibili Inc. (NASDAQ:BILI), with a stake worth $519.9 million reported as of the end of March. Trailing Yiheng Capital was Lone Pine Capital, which amassed a stake valued at $449.7 million. Boyu Capital, Alkeon Capital Management, and Hillhouse Capital 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 Boyu Capital allocated the biggest weight to Bilibili Inc. (NASDAQ:BILI), around 67.87% of its 13F portfolio. Yiheng Capital is also relatively very bullish on the stock, dishing out 23.58 percent of its 13F equity portfolio to BILI.

With a general bullishness amongst the heavyweights, some big names have jumped into Bilibili Inc. (NASDAQ:BILI) headfirst. Broad Peak Investment Holdings, managed by Hyder Ahmad, assembled the most outsized position in Bilibili Inc. (NASDAQ:BILI). Broad Peak Investment Holdings had $17.8 million invested in the company at the end of the quarter. Jorge Paulo Lemann's 3G Capital also initiated a $14.5 million position during the quarter. The following funds were also among the new BILI investors: James Thomas Berylson's Berylson Capital Partners, Michel Massoud's Melqart Asset Management, and Rob Citrone's Discovery Capital Management.

Let's go over hedge fund activity in other stocks similar to Bilibili Inc. (NASDAQ:BILI). These stocks are SYSCO Corporation (NYSE:SYY), Sempra Energy (NYSE:SRE), Chipotle Mexican Grill, Inc. (NYSE:CMG), Lululemon Athletica inc. (NASDAQ:LULU), American International Group Inc (NYSE:AIG), Digital Realty Trust, Inc. (NYSE:DLR), and HP Inc. (NYSE:HPQ). All of these stocks' market caps are similar to BILI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYY,42,2719253,2 SRE,27,596834,-6 CMG,41,3037666,6 LULU,41,751855,-9 AIG,33,2471193,-8 DLR,22,296357,-1 HPQ,43,1526496,4 Average,35.6,1628522,-1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.6 hedge funds with bullish positions and the average amount invested in these stocks was $1629 million. That figure was $3015 million in BILI's case. HP Inc. (NYSE:HPQ) is the most popular stock in this table. On the other hand Digital Realty Trust, Inc. (NYSE:DLR) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Bilibili Inc. (NASDAQ:BILI) is more popular among hedge funds. Our overall hedge fund sentiment score for BILI is 90. 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 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately BILI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BILI were disappointed as the stock returned 4.1% since the end of the first quarter (through 6/11) 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 since 2019.

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

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