Were Hedge Funds Right About Sogou Inc. (SOGO)?
Is Sogou Inc. (NYSE:SOGO) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Sogou Inc. (NYSE:SOGO) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SOGO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare SOGO to other stocks including Live Oak Bancshares Inc (NASDAQ:LOB), Yelp Inc (NYSE:YELP), and TreeHouse Foods Inc. (NYSE:THS) to get a better sense of its popularity.
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Do Hedge Funds Think SOGO Is A Good Stock To Buy Now?
At first quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SOGO over the last 23 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Sogou Inc. (NYSE:SOGO), with a stake worth $21.9 million reported as of the end of March. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $15.6 million. Omni Partners, Millennium Management, and Schonfeld Strategic Advisors 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 HighVista Strategies allocated the biggest weight to Sogou Inc. (NYSE:SOGO), around 2.02% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, earmarking 1.01 percent of its 13F equity portfolio to SOGO.
Since Sogou Inc. (NYSE:SOGO) has witnessed falling interest from the aggregate hedge fund industry, it's easy to see that there exists a select few hedge funds that decided to sell off their positions entirely in the first quarter. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace LLP dumped the biggest investment of the "upper crust" of funds monitored by Insider Monkey, worth an estimated $3.7 million in stock, and Bart Baum's Ionic Capital Management was right behind this move, as the fund sold off about $0.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to Sogou Inc. (NYSE:SOGO). These stocks are Live Oak Bancshares Inc (NASDAQ:LOB), Yelp Inc (NYSE:YELP), TreeHouse Foods Inc. (NYSE:THS), Papa John's International, Inc. (NASDAQ:PZZA), Microvision, Inc. (NASDAQ:MVIS), The Simply Good Foods Company (NASDAQ:SMPL), and Helmerich & Payne, Inc. (NYSE:HP). All of these stocks' market caps are similar to SOGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LOB,10,113600,-7 YELP,20,513325,-11 THS,27,368885,3 PZZA,32,355821,0 MVIS,12,21630,6 SMPL,22,177708,6 HP,21,152124,2 Average,20.6,243299,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $243 million. That figure was $108 million in SOGO's case. Papa John's International, Inc. (NASDAQ:PZZA) is the most popular stock in this table. On the other hand Live Oak Bancshares Inc (NASDAQ:LOB) is the least popular one with only 10 bullish hedge fund positions. Sogou Inc. (NYSE:SOGO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SOGO is 48.6. 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 SOGO, though not to the same extent, as the stock returned 17% since the end of Q1 (through July 23rd) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
