Hedge Funds Keep Betting On Pinduoduo Inc. (PDD)

·6 min read

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. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Pinduoduo Inc. (NASDAQ:PDD)?

Pinduoduo Inc. (NASDAQ:PDD) has seen an increase in enthusiasm from smart money lately. Pinduoduo Inc. (NASDAQ:PDD) was in 56 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 54. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 54 hedge funds in our database with PDD positions at the end of the fourth quarter. Our calculations also showed that PDD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Lei Zhang Hillhouse Capital
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, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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. Now we're going to take a gander at the recent hedge fund action regarding Pinduoduo Inc. (NASDAQ:PDD).

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

Heading into the second quarter of 2021, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the fourth quarter of 2020. By comparison, 28 hedge funds held shares or bullish call options in PDD a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Tiger Global Management LLC held the most valuable stake in Pinduoduo Inc. (NASDAQ:PDD), which was worth $1881.4 million at the end of the fourth quarter. On the second spot was Hillhouse Capital Management which amassed $1368.6 million worth of shares. Fisher Asset Management, Renaissance Technologies, and Tairen Capital 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 Tairen Capital allocated the biggest weight to Pinduoduo Inc. (NASDAQ:PDD), around 34.12% of its 13F portfolio. Panview Capital is also relatively very bullish on the stock, earmarking 28.69 percent of its 13F equity portfolio to PDD.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Tybourne Capital Management, managed by Eashwar Krishnan, assembled the biggest position in Pinduoduo Inc. (NASDAQ:PDD). Tybourne Capital Management had $185.4 million invested in the company at the end of the quarter. Panayotis Takis Sparaggis's Alkeon Capital Management also made a $133.9 million investment in the stock during the quarter. The other funds with brand new PDD positions are Matthew Hulsizer's PEAK6 Capital Management, Frank Fu's CaaS Capital, and Israel Englander's Millennium Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Pinduoduo Inc. (NASDAQ:PDD) but similarly valued. These stocks are Wells Fargo & Company (NYSE:WFC), Danaher Corporation (NYSE:DHR), Medtronic plc (NYSE:MDT), Novo Nordisk A/S (NYSE:NVO), Costco Wholesale Corporation (NASDAQ:COST), T-Mobile US, Inc. (NASDAQ:TMUS), and Citigroup Inc. (NYSE:C). This group of stocks' market caps match PDD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WFC,96,7454581,-3 DHR,81,5796963,0 MDT,65,3627546,6 NVO,23,2929727,0 COST,56,4014769,-5 TMUS,98,9055738,-5 C,90,6938143,-5 Average,72.7,5688210,-1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 72.7 hedge funds with bullish positions and the average amount invested in these stocks was $5688 million. That figure was $6294 million in PDD's case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand Novo Nordisk A/S (NYSE:NVO) is the least popular one with only 23 bullish hedge fund positions. Pinduoduo Inc. (NASDAQ:PDD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PDD is 59. 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately PDD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PDD investors were disappointed as the stock returned -8.9% since the end of March (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 in 2021.

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

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