Is Bilibili Inc. (BILI) A Good Stock To Buy?

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Bilibili Inc. (NASDAQ:BILI) makes for a good investment right now.

Is BILI a good stock to buy?Bilibili Inc. (NASDAQ:BILI) was in 47 hedge funds' portfolios at the end of June. The all time high for this statistic is 53. BILI shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 53 hedge funds in our database with BILI positions at the end of the first quarter. Our calculations also showed that BILI isn't among the30 most popular stocks among hedge funds(click for Q2 rankings).

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.

James Dinan of York Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like thisemerging lithium stock. We go through lists like the 10best EV stocksto 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 onour homepage. Keeping this in mind we're going to analyze the latest hedge fund action encompassing Bilibili Inc. (NASDAQ:BILI).

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

At second quarter's end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BILI over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Yiheng Capital, managed by Jonathan Guo, holds the biggest position in Bilibili Inc. (NASDAQ:BILI). Yiheng Capital has a $591.7 million position in the stock, comprising 23.8% of its 13F portfolio. The second most bullish fund manager isAlkeon Capital Management, managed by Panayotis Takis Sparaggis, which holds a $252.2 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism encompass Lei Zhang's Hillhouse Capital Management, and Josh Resnick's Jericho Capital Asset Management. In terms of the portfolio weights assigned to each positionYiheng Capitalallocated the biggest weight to Bilibili Inc. (NASDAQ:BILI), around 23.81% of its 13F portfolio. Cartica Management is also relatively very bullish on the stock, dishing out 16.02 percent of its 13F equity portfolio to BILI.

Judging by the fact that Bilibili Inc. (NASDAQ:BILI) has experienced declining sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of fund managers that elected to cut their full holdings last quarter. Intriguingly,Lone Pine Capitaldumped the largest investment of all the hedgies tracked by Insider Monkey, valued at an estimated $449.7 million in stock. Alex Sacerdote's fund,Whale Rock Capital Management, also sold off its stock, about $197.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 6 funds last quarter.

Let's now review hedge fund activity in other stocks similar to Bilibili Inc. (NASDAQ:BILI). These stocks are IQVIA Holdings, Inc. (NYSE:IQV), Walgreens Boots Alliance Inc (NASDAQ:WBA), National Grid plc (NYSE:NGG), Koninklijke Philips NV (NYSE:PHG), Lloyds Banking Group PLC (NYSE:LYG), Kimberly Clark Corporation (NYSE:KMB), and Constellation Brands, Inc. (NYSE:STZ). This group of stocks' market caps are closest to BILI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IQV,69,3809269,7 WBA,41,1113117,0 NGG,7,352045,-2 PHG,10,122622,-1 LYG,8,16299,3 KMB,37,903375,6 STZ,50,1607881,-8 Average,31.7,1132087,0.7 [/table]

View table hereif you experience formatting issues.

As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1132 million. That figure was $2001 million in BILI's case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 7 bullish hedge fund positions. Bilibili Inc. (NASDAQ:BILI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BILI is 57.9. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 5 most popular stocksamong hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately BILI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BILI were disappointed as the stock returned -46.7% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 5 most popular stocksamong hedge funds as many of these stocks already outperformed the market since 2019.

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