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Hedge Funds Are Crazy About Hollysys Automation Technologies Ltd (HOLI)

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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Hollysys Automation Technologies Ltd (NASDAQ:HOLI).

Is Hollysys Automation Technologies Ltd (NASDAQ:HOLI) a bargain? The best stock pickers were betting on the stock. The number of long hedge fund bets moved up by 1 lately. Hollysys Automation Technologies Ltd (NASDAQ:HOLI) was in 19 hedge funds' portfolios at the end of June. The all time high for this statistic is 22. Our calculations also showed that HOLI isn't among the 30 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.

Matthew Halbower Pentwater Capital
Matthew Halbower Pentwater Capital

Matthew Halbower of Pentwater Capital

With all of this in mind we're going to take a gander at the key hedge fund action surrounding Hollysys Automation Technologies Ltd (NASDAQ:HOLI).

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

At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the first quarter of 2020. On the other hand, there were a total of 10 hedge funds with a bullish position in HOLI a year ago. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is HOLI A Good Stock To Buy?
Is HOLI A Good Stock To Buy?

The largest stake in Hollysys Automation Technologies Ltd (NASDAQ:HOLI) was held by Yiheng Capital, which reported holding $44.3 million worth of stock at the end of June. It was followed by Renaissance Technologies with a $23.9 million position. Other investors bullish on the company included Halcyon Asset Management, D E Shaw, and Pentwater Capital Management. In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Hollysys Automation Technologies Ltd (NASDAQ:HOLI), around 1.78% of its 13F portfolio. Halcyon Asset Management is also relatively very bullish on the stock, dishing out 1.64 percent of its 13F equity portfolio to HOLI.

Consequently, key hedge funds were leading the bulls' herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Hollysys Automation Technologies Ltd (NASDAQ:HOLI). Marshall Wace LLP had $2.9 million invested in the company at the end of the quarter. David Alexander Witkin's Beryl Capital Management also initiated a $1.6 million position during the quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Hollysys Automation Technologies Ltd (NASDAQ:HOLI) but similarly valued. These stocks are Moneygram International Inc (NYSE:MGI), NetSTREIT Corp. (NYSE:NTST), Rafael Holdings, Inc. (NYSE:RFL), Interface, Inc. (NASDAQ:TILE), iTeos Therapeutics, Inc. (NASDAQ:ITOS), Heritage Financial Corporation (NASDAQ:HFWA), and WisdomTree Investments, Inc. (NASDAQ:WETF). This group of stocks' market values are similar to HOLI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MGI,24,224007,3 NTST,10,105672,0 RFL,8,55044,0 TILE,11,28490,-1 ITOS,15,192274,3 HFWA,8,21282,3 WETF,26,79096,8 Average,14.6,100838,2.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $107 million in HOLI's case. WisdomTree Investments, Inc. (NASDAQ:WETF) is the most popular stock in this table. On the other hand Rafael Holdings, Inc. (NYSE:RFL) is the least popular one with only 8 bullish hedge fund positions. Hollysys Automation Technologies Ltd (NASDAQ:HOLI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOLI is 62.5. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on HOLI as the stock returned 34.2% since the end of Q2 (through 10/22) 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.