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Hedge Funds Have Never Been This Bullish On ASML Holding N.V. (ASML)

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of ASML Holding N.V. (NASDAQ:ASML).

ASML Holding N.V. (NASDAQ:ASML) was in 35 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ASML has seen an increase in enthusiasm from smart money lately. There were 30 hedge funds in our database with ASML positions at the end of the fourth quarter. Our calculations also showed that ASML isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Alex Sacerdote of Whale Rock Capital Management

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 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 go over the fresh hedge fund action encompassing ASML Holding N.V. (NASDAQ:ASML).

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

Heading into the second quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in ASML a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, Fisher Asset Management held the most valuable stake in ASML Holding N.V. (NASDAQ:ASML), which was worth $2445.2 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $484.7 million worth of shares. Citadel Investment Group, Whale Rock Capital Management, and Citadel Investment Group 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 Breakline Capital allocated the biggest weight to ASML Holding N.V. (NASDAQ:ASML), around 6.25% of its 13F portfolio. Unio Capital is also relatively very bullish on the stock, dishing out 4.37 percent of its 13F equity portfolio to ASML.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Whale Rock Capital Management, managed by Alex Sacerdote, created the biggest position in ASML Holding N.V. (NASDAQ:ASML). Whale Rock Capital Management had $199.8 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $126.7 million investment in the stock during the quarter. The following funds were also among the new ASML investors: Lee Ainslie's Maverick Capital, Morris Mark's Mark Asset Management, and Karim Abbadi and Edward McBride's Centiva Capital.

Let's now take a look at hedge fund activity in other stocks similar to ASML Holding N.V. (NASDAQ:ASML). We will take a look at Comcast Corporation (NASDAQ:CMCSA), Verizon Communications Inc. (NYSE:VZ), Exxon Mobil Corporation (NYSE:XOM), Netflix, Inc. (NASDAQ:NFLX), Adobe Inc. (NASDAQ:ADBE), The Coca-Cola Company (NYSE:KO), and Cisco Systems, Inc. (NASDAQ:CSCO). This group of stocks' market valuations match ASML's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMCSA,88,9762151,4 VZ,69,11383576,2 XOM,65,2770198,2 NFLX,110,14159343,-6 ADBE,107,12111692,-7 KO,61,24903946,-1 CSCO,59,5194074,-1 Average,79.9,11469283,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 79.9 hedge funds with bullish positions and the average amount invested in these stocks was $11469 million. That figure was $3827 million in ASML's case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Cisco Systems, Inc. (NASDAQ:CSCO) is the least popular one with only 59 bullish hedge fund positions. Compared to these stocks ASML Holding N.V. (NASDAQ:ASML) is even less popular than CSCO. Our overall hedge fund sentiment score for ASML is 40. 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 19.3% in 2021 through June 25th but managed to beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on ASML, though not to the same extent, as the stock returned 11.5% since the end of March (through June 25th) and outperformed the market as well.

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