Hedge funds have never been so bullish on Tencent Music Entertainment Group (TME)


At Insider Monkey, we have passed 866 13F cases that hedge funds and leading investors are required to file by the SEC. 13F Deposits show the portfolio positions of funds and investors as of March 31. In this article, we take a look at what these funds think about Tencent Music Entertainment Group (NYSE:TME) on the basis of this data.

Tencent Music Entertainment Group (NYSE:TME) investors should pay attention to an increase in the activity of the world’s largest hedge funds in recent months. Tencent Music Entertainment Group (NYSE:TME) was in 63 hedge fund portfolios at the end of the first quarter of 2021. The all-time high for this statistic was previously 30. This means that the bullish number of hedge fund positions in this stock is currently at its highest level. There were 26 hedge funds in our database with TME holdings at the end of December. Our calculations also showed that TME is not one of the 30 most popular stocks among hedge funds (click for Q1 ranking).

The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indices. Our research has shown that small cap hedge fund stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by 115 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the margin of underperformance of these stocks has increased in recent years. Investors who are long in the market and short on these stocks would have reported more than 27% per year between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Gil Simon from SoMa Equity Partners

Gil Simon from SoMa Equity Partners

At Insider Monkey, we leave no stone unturned when we research the next big investment idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We’re going through lists like the Top 10 Hydrogen Fuel Cell Stocks to pick the next Tesla that will deliver 10x efficiency. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can subscribe to our free daily newsletter at our home page. With that in mind, we’ll take a look at key hedge fund action regarding Tencent Music Entertainment Group (NYSE:TME).

Do hedge funds think TME is a good stock to buy now?

As we approach the second quarter of 2021, a total of 63 of the hedge funds tracked by Insider Monkey were long on this stock, a 142% change from the fourth quarter of 2020. On the other hand, there was a total of 25 hedge funds. with a bullish position on TME a year ago. So let’s see which hedge funds were among the top stock holders and which hedge funds were making big moves.

More precisely, BY Shaw was the largest shareholder in Tencent Music Entertainment Group (NYSE: TME), with a stake worth $ 351 million reported in late March. Lagging behind DE Shaw was SoMa Equity Partners, which raised a stake valued at $ 245.9 million. Renaissance Technologies, Crake Asset Management and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders in the company. In terms of the portfolio weights assigned to each position, Infini Capital assigned the largest weight to Tencent Music Entertainment Group (NYSE: TME), approximately 16.16% of its 13F portfolio. Voléon capital is also relatively very bullish on the stock, allocating 14.08% of its 13F equity portfolio to TME.

As you might expect, key fund managers have gone head-first into Tencent Music Entertainment Group (NYSE: TME). Capital management element, managed by Jeffrey Talpins, created the largest position in Tencent Music Entertainment Group (NYSE: TME). Element Capital Management had invested $ 46.5 million in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also initiated a $ 35.7 million position during the quarter. Other funds with new equity positions are Jeneq Management of Sanjay Venkat, Ben Levine, Andrew Manuel and Stefan Renold LMR partners, and Soros Fund Management by George Soros.

Let’s also take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tencent Music Entertainment Group (NYSE: TME) but of similar value. We’ll take a look at Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), Hilton Worldwide Holdings Inc (NYSE:HLT), Corning Incorporated (NYSE:GLW), Zimmer Biomet Holdings Inc (NYSE:ZBH), Peloton Interactive, Inc. (NASDAQ:PTON), Marvell Technology, Inc. (NASDAQ:MRVL) and Orange SA (NYSE:ORAN). The market capitalizations of this group of stocks are similar to the market capitalization of TME.

[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF position ALXN, 77.6915184.0 HLT, 47.5139343, -13 GLW, 32.507110, -7 ZBH, 50.2151143, -3 PTON, 64 3963327,1 MRVL, 33 683159, -7 ORAN, 2 10613, -1 Medium 43.6 2767126, -4.3 [/table]

See the table here if you have formatting problems.

As you can see, these stocks had an average of 43.6 hedge funds with bullish positions and the average amount invested in these stocks was $ 2,767 million. That figure was $ 1,771 million in the case of TME. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular action in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular with only 2 bullish hedge fund positions. Tencent Music Entertainment Group (NYSE: TME) isn’t that group’s most popular stock, but hedge fund interest is still above average. Our overall hedge fund sentiment score for TME is 80.7. Stocks with a 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 positive signal, but we prefer to spend our time researching the stocks on which hedge funds are accumulating. Our calculations have shown 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 11 and again beat the market by 3.3 percentage points. Unfortunately, TME was not as popular as these 5 stocks and the hedge funds that bet on TME were disappointed as the stock has returned -24.5% since the end of March (until 6/11) and has under- performed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds, as many of these stocks have already outperformed the market since 2019.

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Disclosure: none. This article originally appeared on Monkey initiate.

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