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Should I Buy Logitech International SA (LOGI)?

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  • LOGN.SW

In this article you are going to find out whether hedge funds think Logitech International SA (NASDAQ:LOGI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Logitech International SA (NASDAQ:LOGI) investors should pay attention to an increase in support from the world's most elite money managers recently. Logitech International SA (NASDAQ:LOGI) was in 20 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 21. There were 15 hedge funds in our database with LOGI positions at the end of the first quarter. Our calculations also showed that LOGI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Billionaire David Siegel's Top 10 Stock Picks
Billionaire David Siegel's Top 10 Stock Picks

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. 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 check out the latest hedge fund action encompassing Logitech International SA (NASDAQ:LOGI).

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

Heading into the third quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in LOGI over the last 24 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is LOGI A Good Stock To Buy?
Is LOGI A Good Stock To Buy?

More specifically, Arrowstreet Capital was the largest shareholder of Logitech International SA (NASDAQ:LOGI), with a stake worth $196 million reported as of the end of June. Trailing Arrowstreet Capital was Renaissance Technologies, which amassed a stake valued at $130.8 million. Polar Capital, Citadel Investment Group, and Two Sigma 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 Navellier & Associates allocated the biggest weight to Logitech International SA (NASDAQ:LOGI), around 0.98% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, designating 0.54 percent of its 13F equity portfolio to LOGI.

As aggregate interest increased, key money managers were leading the bulls' herd. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the most valuable position in Logitech International SA (NASDAQ:LOGI). Polar Capital had $70.9 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $9.8 million investment in the stock during the quarter. The following funds were also among the new LOGI investors: Leon Shaulov's Maplelane Capital, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, and D. E. Shaw's D E Shaw.

Let's also examine hedge fund activity in other stocks similar to Logitech International SA (NASDAQ:LOGI). We will take a look at FirstEnergy Corp. (NYSE:FE), PG&E Corporation (NYSE:PCG), SK Telecom Co., Ltd. (NYSE:SKM), Seagate Technology plc (NASDAQ:STX), KeyCorp (NYSE:KEY), Entergy Corporation (NYSE:ETR), and L Brands Inc (NYSE:LB). This group of stocks' market values match LOGI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FE,36,1704357,-15 PCG,64,4663822,-1 SKM,8,68342,0 STX,31,1919802,4 KEY,40,443140,-1 ETR,31,595450,0 LB,53,6315005,-6 Average,37.6,2244274,-2.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $2244 million. That figure was $527 million in LOGI's case. PG&E Corporation (NYSE:PCG) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. Logitech International SA (NASDAQ:LOGI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LOGI is 49.3. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately LOGI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LOGI investors were disappointed as the stock returned -25.1% since the end of June (through 10/22) 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 in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.