Is WiMi Hologram Cloud Inc. (WIMI) A Good Stock To Buy?

Asma UL Husna
·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. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider WiMi Hologram Cloud Inc. (NASDAQ:WIMI) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

WiMi Hologram Cloud Inc. (NASDAQ:WIMI) has experienced an increase in support from the world's most elite money managers of late. WiMi Hologram Cloud Inc. (NASDAQ:WIMI) was in 3 hedge funds' portfolios at the end of September. The all time high for this statistics is 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 2 hedge funds in our database with WIMI positions at the end of the second quarter. Our calculations also showed that WIMI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

James Flynn Deerfield Management
James Flynn Deerfield Management

James E. Flynn of Deerfield Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Keeping this in mind let's check out the recent hedge fund action encompassing WiMi Hologram Cloud Inc. (NASDAQ:WIMI).

How have hedgies been trading WiMi Hologram Cloud Inc. (NASDAQ:WIMI)?

At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in WIMI a year ago. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Israel Englander's Millennium Management has the most valuable position in WiMi Hologram Cloud Inc. (NASDAQ:WIMI), worth close to $0.8 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Paloma Partners, led by Donald Sussman, holding a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism consist of James E. Flynn's Deerfield Management, Donald Sussman's Paloma Partners and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Paloma Partners allocated the biggest weight to WiMi Hologram Cloud Inc. (NASDAQ:WIMI), around 0.01% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, dishing out 0.003 percent of its 13F equity portfolio to WIMI.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the biggest position in WiMi Hologram Cloud Inc. (NASDAQ:WIMI). Millennium Management had $0.8 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new WIMI investors: Donald Sussman's Paloma Partners and Israel Englander's Millennium Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as WiMi Hologram Cloud Inc. (NASDAQ:WIMI) but similarly valued. We will take a look at Wins Finance Holdings Inc. (NASDAQ:WINS), Tejon Ranch Company (NYSE:TRC), Vermilion Energy Inc (NYSE:VET), Lawson Products, Inc. (NASDAQ:LAWS), Corvus Gold Inc. (NASDAQ:KOR), Amerant Bancorp Inc. (NASDAQ:AMTB), and MTS Systems Corporation (NASDAQ:MTSC). This group of stocks' market valuations are similar to WIMI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WINS,1,510,0 TRC,13,51914,2 VET,6,8820,-2 LAWS,5,26245,-2 KOR,4,177014,4 AMTB,2,3076,0 MTSC,14,24625,-1 Average,6.4,41743,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $1 million in WIMI's case. MTS Systems Corporation (NASDAQ:MTSC) is the most popular stock in this table. On the other hand Wins Finance Holdings Inc. (NASDAQ:WINS) is the least popular one with only 1 bullish hedge fund positions. WiMi Hologram Cloud Inc. (NASDAQ:WIMI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WIMI is 43.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on WIMI as the stock returned 8.3% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.

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

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