Was The Smart Money Right About JD.Com Inc (JD)?


With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was JD.Com Inc (NASDAQ:JD).

Is JD.Com Inc (NASDAQ:JD) the right investment to pursue these days? Money managers were getting more optimistic. The number of long hedge fund positions advanced by 1 in recent months. JD.Com Inc (NASDAQ:JD) was in 76 hedge funds’ portfolios at the end of June. The all time high for this statistic is 90. Our calculations also showed that JD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 75 hedge funds in our database with JD holdings at the end of March.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.



Philippe Laffont of Coatue Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy 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 go over the recent hedge fund action surrounding JD.Com Inc (NASDAQ:JD).

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

At second quarter’s end, a total of 76 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 1% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JD over the last 24 quarters. So, let’s see 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 JD.Com Inc (NASDAQ:JD), which was worth $4117.8 million at the end of the second quarter. On the second spot was D1 Capital Partners which amassed $1240.8 million worth of shares. Viking Global, Fisher Asset Management, and ARK Investment 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 Kontiki Capital allocated the biggest weight to JD.Com Inc (NASDAQ:JD), around 29.14% of its 13F portfolio. Kylin Management is also relatively very bullish on the stock, designating 20.49 percent of its 13F equity portfolio to JD.

Now, key hedge funds have jumped into JD.Com Inc (NASDAQ:JD) headfirst. Viking Global, managed by Andreas Halvorsen, assembled the largest position in JD.Com Inc (NASDAQ:JD). Viking Global had $657.7 million invested in the company at the end of the quarter. Gabriel Plotkin’s Melvin Capital Management also initiated a $379.1 million position during the quarter. The other funds with brand new JD positions are Benjamin A. Smith’s Laurion Capital Management, Gabriel Plotkin’s Melvin Capital Management, and Philippe Laffont’s Coatue Management.

Let’s go over hedge fund activity in other stocks similar to JD.Com Inc (NASDAQ:JD). We will take a look at American Tower Corporation (REIT) (NYSE:AMT), Sony Group Corp (NYSE:SONY), Target Corporation (NYSE:TGT), Caterpillar Inc. (NYSE:CAT), TotalEnergies SE (NYSE:TTE), General Electric Company (NYSE:GE), and HSBC Holdings plc (NYSE:HSBC). This group of stocks’ market valuations resemble JD’s market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMT,55,4720340,-3 SONY,20,409056,-7 TGT,66,5865028,6 CAT,62,5264268,9 TTE,15,1132420,-2 GE,67,6087180,-1 HSBC,11,212763,-1 Average,42.3,3384436,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.3 hedge funds with bullish positions and the average amount invested in these stocks was $3384 million. That figure was $10698 million in JD’s case. General Electric Company (NYSE:GE) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks JD.Com Inc (NASDAQ:JD) is more popular among hedge funds. Our overall hedge fund sentiment score for JD is 81.3. 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Unfortunately JD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on JD were disappointed as the stock returned -1.9% since the end of the second quarter (through 10/29) 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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