Is DADA Stock A Buy or Sell?
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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Dada Nexus Limited (NASDAQ:DADA) changed recently.
Is DADA stock a buy? Dada Nexus Limited (NASDAQ:DADA) was in 25 hedge funds' portfolios at the end of December. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently reached a brand new all time high. DADA has seen an increase in support from the world's most elite money managers in recent months. There were 17 hedge funds in our database with DADA holdings at the end of September. Our calculations also showed that DADA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are tons of methods stock traders use to size up their stock investments. A pair of the most underrated methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce the broader indices by a solid margin (see the details here).
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's take a peek at the recent hedge fund action surrounding Dada Nexus Limited (NASDAQ:DADA).
Do Hedge Funds Think DADA Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 47% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in DADA 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.
The largest stake in Dada Nexus Limited (NASDAQ:DADA) was held by Kylin Management, which reported holding $41 million worth of stock at the end of December. It was followed by Rokos Capital Management with a $27.9 million position. Other investors bullish on the company included Driehaus Capital, D E Shaw, and Aubrey Capital Management. In terms of the portfolio weights assigned to each position Kylin Management allocated the biggest weight to Dada Nexus Limited (NASDAQ:DADA), around 11.74% of its 13F portfolio. Aubrey Capital Management is also relatively very bullish on the stock, designating 4.02 percent of its 13F equity portfolio to DADA.
As aggregate interest increased, key hedge funds were leading the bulls' herd. Driehaus Capital, managed by Richard Driehaus, initiated the most outsized position in Dada Nexus Limited (NASDAQ:DADA). Driehaus Capital had $18.2 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $17.3 million investment in the stock during the quarter. The other funds with brand new DADA positions are James Thomas Berylson's Berylson Capital Partners, Manoj Jain and Sohit Khurana's Maso Capital, and Run Ye, Junji Takegami and Hoyon Hwang's Tiger Pacific Capital.
Let's go over hedge fund activity in other stocks similar to Dada Nexus Limited (NASDAQ:DADA). These stocks are AGNC Investment Corp. (NASDAQ:AGNC), Hubbell Incorporated (NYSE:HUBB), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Chemed Corporation (NYSE:CHE), Natera Inc (NASDAQ:NTRA), Iron Mountain Incorporated (NYSE:IRM), and Service Corporation International (NYSE:SCI). This group of stocks' market values are closest to DADA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGNC,25,353105,-7 HUBB,22,425947,-8 ACAD,38,3081113,-3 CHE,31,428254,-3 NTRA,46,1175008,3 IRM,18,64778,-7 SCI,28,814855,-2 Average,29.7,906151,-3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $906 million. That figure was $168 million in DADA's case. Natera Inc (NASDAQ:NTRA) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 18 bullish hedge fund positions. Dada Nexus Limited (NASDAQ:DADA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DADA is 52.5. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately DADA wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); DADA investors were disappointed as the stock returned -35.9% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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