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Do Hedge Funds Love Immersion Corporation (IMMR)?

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·6 min read
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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Immersion Corporation (NASDAQ:IMMR) changed recently.

Immersion Corporation (NASDAQ:IMMR) investors should be aware of an increase in enthusiasm from smart money recently. Immersion Corporation (NASDAQ:IMMR) was in 21 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that IMMR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chuck Royce
Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Now let's take a look at the recent hedge fund action regarding Immersion Corporation (NASDAQ:IMMR).

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

At second quarter's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards IMMR over the last 24 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Is IMMR A Good Stock To Buy?
Is IMMR A Good Stock To Buy?

More specifically, Raging Capital Management was the largest shareholder of Immersion Corporation (NASDAQ:IMMR), with a stake worth $19.5 million reported as of the end of June. Trailing Raging Capital Management was Skylands Capital, which amassed a stake valued at $5.8 million. Millennium Management, Roubaix Capital, and VIEX Capital 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 Raging Capital Management allocated the biggest weight to Immersion Corporation (NASDAQ:IMMR), around 46.74% of its 13F portfolio. VIEX Capital Advisors is also relatively very bullish on the stock, dishing out 3.13 percent of its 13F equity portfolio to IMMR.

As aggregate interest increased, key money managers have been driving this bullishness. Royce & Associates, managed by Chuck Royce, created the biggest position in Immersion Corporation (NASDAQ:IMMR). Royce & Associates had $2.7 million invested in the company at the end of the quarter. Ali Motamed's Invenomic Capital Management also initiated a $2.4 million position during the quarter. The following funds were also among the new IMMR investors: Warren Lammert's Granite Point Capital, Keith M. Rosenbloom's Cruiser Capital Advisors, and Frederick DiSanto's Ancora Advisors.

Let's check out hedge fund activity in other stocks similar to Immersion Corporation (NASDAQ:IMMR). These stocks are Ondas Holdings Inc. (NASDAQ:ONDS), Xeris Pharmaceuticals, Inc. (NASDAQ:XERS), Seelos Therapeutics, Inc. (NASDAQ:SEEL), Ocwen Financial Corporation (NYSE:OCN), Laird Superfood, Inc. (NYSE:LSF), BlueCity Holdings Limited (NASDAQ:BLCT), and Platinum Group Metals Limited (NYSE:PLG). All of these stocks' market caps match IMMR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ONDS,8,13683,3 XERS,10,56021,-1 SEEL,13,39522,2 OCN,10,48688,0 LSF,5,10254,1 BLCT,3,831,1 PLG,5,5180,-1 Average,7.7,24883,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.7 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $69 million in IMMR's case. Seelos Therapeutics, Inc. (NASDAQ:SEEL) is the most popular stock in this table. On the other hand BlueCity Holdings Limited (NASDAQ:BLCT) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Immersion Corporation (NASDAQ:IMMR) is more popular among hedge funds. Our overall hedge fund sentiment score for IMMR is 82.3. 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. 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. Unfortunately IMMR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on IMMR were disappointed as the stock returned -20.1% since the end of the second quarter (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 since 2019.

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