Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 4 percentage points through September 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Hedge fund interest in Camtek LTD. (NASDAQ:CAMT) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CAMT to other stocks including Investors Title Company (NASDAQ:ITIC), Yintech Investment Holdings Limited (NASDAQ:YIN), and BioLife Solutions, Inc. (NASDAQ:BLFS) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let's check out the fresh hedge fund action regarding Camtek LTD. (NASDAQ:CAMT).
What have hedge funds been doing with Camtek LTD. (NASDAQ:CAMT)?
At Q2's end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in CAMT a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the number one position in Camtek LTD. (NASDAQ:CAMT). Renaissance Technologies has a $16.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Millennium Management, led by Israel Englander, holding a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish consist of Chuck Royce's Royce & Associates, John Overdeck and David Siegel's Two Sigma Advisors and Paul Marshall and Ian Wace's Marshall Wace LLP.
Since Camtek LTD. (NASDAQ:CAMT) has witnessed a decline in interest from hedge fund managers, logic holds that there is a sect of hedgies that slashed their positions entirely in the second quarter. At the top of the heap, Louis Navellier's Navellier & Associates dropped the biggest investment of all the hedgies tracked by Insider Monkey, totaling close to $0.9 million in stock, and Frederick DiSanto's Ancora Advisors was right behind this move, as the fund sold off about $0.4 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Camtek LTD. (NASDAQ:CAMT). These stocks are Investors Title Company (NASDAQ:ITIC), Yintech Investment Holdings Limited (NASDAQ:YIN), BioLife Solutions, Inc. (NASDAQ:BLFS), and Clearwater Paper Corp (NYSE:CLW). This group of stocks' market valuations match CAMT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ITIC,3,39506,-1 YIN,1,264,-1 BLFS,13,76163,-2 CLW,8,18809,-1 Average,6.25,33686,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $25 million in CAMT's case. BioLife Solutions, Inc. (NASDAQ:BLFS) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 1 bullish hedge fund positions. Camtek LTD. (NASDAQ:CAMT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on CAMT as the stock returned 15.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.