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. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Li Auto Inc. (NASDAQ:LI) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is LI a good stock to buy? Li Auto Inc. (NASDAQ:LI) has experienced a decrease in hedge fund interest recently. Li Auto Inc. (NASDAQ:LI) was in 18 hedge funds' portfolios at the end of March. The all time high for this statistic is 31. Our calculations also showed that LI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind we're going to take a look at the fresh hedge fund action regarding Li Auto Inc. (NASDAQ:LI).
Do Hedge Funds Think LI Is A Good Stock To Buy Now?
At first quarter's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -42% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in LI 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.
According to Insider Monkey's hedge fund database, Philippe Laffont's Coatue Management has the most valuable position in Li Auto Inc. (NASDAQ:LI), worth close to $319.7 million, corresponding to 1.8% of its total 13F portfolio. Sitting at the No. 2 spot is Jericho Capital Asset Management, led by Josh Resnick, holding a $93.8 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Jay Chen's Himension Capital, and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Himension Capital allocated the biggest weight to Li Auto Inc. (NASDAQ:LI), around 4.13% of its 13F portfolio. One01 Capital is also relatively very bullish on the stock, dishing out 3.3 percent of its 13F equity portfolio to LI.
Seeing as Li Auto Inc. (NASDAQ:LI) has faced a decline in interest from the smart money, logic holds that there lies a certain "tier" of hedgies who were dropping their entire stakes in the first quarter. Intriguingly, Jonathan Barrett and Paul Segal's Luminus Management said goodbye to the largest investment of the 750 funds watched by Insider Monkey, totaling an estimated $53.5 million in stock. Simon Sadler's fund, Segantii Capital, also dropped its stock, about $40.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 13 funds in the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Li Auto Inc. (NASDAQ:LI) but similarly valued. These stocks are United Microelectronics Corp (NYSE:UMC), ONEOK, Inc. (NYSE:OKE), Baker Hughes Company (NYSE:BKR), Verisign, Inc. (NASDAQ:VRSN), Zillow Group Inc (NASDAQ:Z), Alexandria Real Estate Equities Inc (NYSE:ARE), and FleetCor Technologies, Inc. (NYSE:FLT). All of these stocks' market caps resemble LI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UMC,11,173050,-1 OKE,20,67349,-2 BKR,42,965463,7 VRSN,42,5639028,-5 Z,82,5732513,-1 ARE,27,434248,13 FLT,39,1455035,-5 Average,37.6,2066669,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $2067 million. That figure was $494 million in LI's case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) is the least popular one with only 11 bullish hedge fund positions. Li Auto Inc. (NASDAQ:LI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LI is 14.3. 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 28.5% in 2021 through July 23rd and beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on LI, though not to the same extent, as the stock returned 21.1% since the end of Q1 (through July 23rd) and outperformed the market.
Get real-time email alerts: Follow Li Auto Inc. (NASDAQ:LI)
Disclosure: None. This article was originally published at Insider Monkey.