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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Camtek LTD. (NASDAQ:CAMT).
Is Camtek (CAMT) a good stock to buy now? Hedge fund interest in Camtek LTD. (NASDAQ:CAMT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CAMT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Orthofix Medical Inc (NASDAQ:OFIX), Calliditas Therapeutics AB (publ) (NASDAQ:CALT), and Accelerate Diagnostics Inc (NASDAQ:AXDX) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's take a gander at the latest hedge fund action encompassing Camtek LTD. (NASDAQ:CAMT).
What have hedge funds been doing with Camtek LTD. (NASDAQ:CAMT)?
Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in CAMT a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies has the largest position in Camtek LTD. (NASDAQ:CAMT), worth close to $28.2 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $6.6 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish consist of Josh Goldberg's G2 Investment Partners Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Matthew Hulsizer's PEAK6 Capital Management. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to Camtek LTD. (NASDAQ:CAMT), around 0.4% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to CAMT.
Since Camtek LTD. (NASDAQ:CAMT) has witnessed declining sentiment from hedge fund managers, it's easy to see that there exists a select few funds that decided to sell off their positions entirely in the third quarter. It's worth mentioning that Doron Breen and Mori Arkin's Sphera Global Healthcare Fund sold off the largest investment of all the hedgies watched by Insider Monkey, totaling about $0.5 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund dumped about $0.5 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Camtek LTD. (NASDAQ:CAMT). We will take a look at Orthofix Medical Inc (NASDAQ:OFIX), Calliditas Therapeutics AB (publ) (NASDAQ:CALT), Accelerate Diagnostics Inc (NASDAQ:AXDX), Amyris Inc (NASDAQ:AMRS), Meredith Corporation (NYSE:MDP), Cara Therapeutics Inc (NASDAQ:CARA), and Passage Bio, Inc. (NASDAQ:PASG). This group of stocks' market caps are closest to CAMT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OFIX,17,101060,-2 CALT,11,66043,-1 AXDX,13,31316,0 AMRS,11,124955,-5 MDP,18,162681,-2 CARA,19,75686,1 PASG,15,221636,2 Average,14.9,111911,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $38 million in CAMT's case. Cara Therapeutics Inc (NASDAQ:CARA) is the most popular stock in this table. On the other hand Calliditas Therapeutics AB (publ) (NASDAQ:CALT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Camtek LTD. (NASDAQ:CAMT) is even less popular than CALT. Our overall hedge fund sentiment score for CAMT is 29. 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. Hedge funds clearly dropped the ball on CAMT as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on CAMT as the stock returned 21.2% since Q3 (through December 2nd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.