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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Data I/O Corporation (NASDAQ:DAIO) based on those filings.
Is DAIO a good stock to buy? The best stock pickers were in a bearish mood. The number of long hedge fund bets decreased by 1 in recent months. Data I/O Corporation (NASDAQ:DAIO) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 7. Our calculations also showed that DAIO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 4 hedge funds in our database with DAIO positions at the end of the fourth quarter.
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 115 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.
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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks 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. Keeping this in mind let's take a look at the key hedge fund action encompassing Data I/O Corporation (NASDAQ:DAIO).
Do Hedge Funds Think DAIO Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DAIO over the last 23 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Data I/O Corporation (NASDAQ:DAIO), with a stake worth $3.5 million reported as of the end of March. Trailing Renaissance Technologies was AIGH Investment Partners, which amassed a stake valued at $2.1 million. Greenhaven Road Investment Management was 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 AIGH Investment Partners allocated the biggest weight to Data I/O Corporation (NASDAQ:DAIO), around 0.43% of its 13F portfolio. Greenhaven Road Investment Management is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to DAIO.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Select Equity Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified DAIO as a viable investment and initiated a position in the stock.
Let's now take a look at hedge fund activity in other stocks similar to Data I/O Corporation (NASDAQ:DAIO). These stocks are Soligenix, Inc. (NASDAQ:SNGX), Acorda Therapeutics Inc (NASDAQ:ACOR), T.A.T. Technologies Ltd. (NASDAQ:TATT), The Dixie Group Inc (NASDAQ:DXYN), Indonesia Energy Corporation Limited (NYSE:INDO), China Hgs Real Estate Inc (NASDAQ:HGSH), and Income Opportunity Realty Investors, Inc. (NYSE:IOR). This group of stocks' market caps are similar to DAIO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNGX,1,130,0 ACOR,4,9435,1 TATT,1,1283,0 DXYN,4,7394,0 INDO,2,481,2 HGSH,2,117,1 IOR,1,287,0 Average,2.1,2732,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $6 million in DAIO's case. Acorda Therapeutics Inc (NASDAQ:ACOR) is the most popular stock in this table. On the other hand Soligenix, Inc. (NASDAQ:SNGX) is the least popular one with only 1 bullish hedge fund positions. Data I/O Corporation (NASDAQ:DAIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DAIO is 50.2. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on DAIO as the stock returned 22.9% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.