Author(s): Ben Ward

Shares of Chinese based video sharing company Bilibili (US:BILI) have staged a 130% share price recovery following trends in Hong Kong since equity markets after hitting an annual low point below $8 in late October.

The stock continues to trade more than 85% below its peak hit in early February 2021 during the pandemic which saw a significant uptick in website usage.

The company was founded by Xu Yi in 2009 and first listed on the Nasdaq in 2018 and created a second listing on the Hong Kong exchange in March 2021.

Bilibili has scaled up quarterly revenues significantly over the last few years to ¥5.79 billion yuan reported in Q3 and is on track to post sales of around ¥21.91 billion for the full financial year.

Over the same time, losses have followed suit with the company on track to report its largest net loss recorded in the history of around -¥7.5 billion (polled by analysts), widening from -¥6.8 billion in the financial year 2021.

 

In the current market, as a result of the FED’s rate hiking cycle, loss making companies on high sales/EV multiples continue to be sold off as the cost of financing rises substantially. The market has rewarded profitable companies with sustainable recurring positive cash flows.

Some hedge funds and institutions have a negative view on the stock and are currently short the company.

Wolverine Asset Management LLC has the largest net short position with -$78.43 million in put options betting against the stock’s continued recovery.

 

Weiss Asset Management LP has -$47.35 million of BILI shorted through the use of put options.

LMR Partners LLP has the third largest net short position worth -$33.22 million. The fund has a $7.05 million long position in the stock and -$40.27 million shorted with put options.

Parallax Volatility Advisers L.P. has the fourth largest net short position of -$11.20 million. The fund has a $2.37 million long position, $40.75 million in call option value and -$54.32 million of put options.

Jefferies Financial Group Inc has the fifth largest net short position of -$9.48 million in put option exposure.

Walleye Trading LLC has a -$7.51 million net short position in the stock consisting of $3.57 million in call option exposure and -$11.08 million in put option exposure.

The Calamos Market Neutral Income Fund has a pure short position worth -$3.13 million in the stock.

National Bank Of Canada has used -$4.57 million in put options to hedge its position in the stock and protect recent gains made over the last few months.

Fintel’s fund sentiment score of 27.00 is currently bearish on the company from the perspective of institutional interest in the stock. The score ranks BILI in the bottom 20% out of 36,375 globally screened securities.

The company currently has 352 institutions on the register that collectively own 112.49 million shares. The largest shareholders include: Yiheng Capital Management, Alibaba Group Holding Ltd, Marshall Wace, Fidelity Series Emerging Markets Opportunities Fund, Allspring Global Investments Holdings, and Artisan Partners Limited Partnership.

The chart to the right shows the declining fund ownership in the stock since its peak in the pandemic.

For an alternative perspective, analysts still think the stock could rise a further 23.90% from current levels this year. Fintel’s consensus target price of 27.32 consists of 11 strong buy recommendations, 20 buy calls and 10 hold ratings on the stock.

This article originally appeared on Fintel

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