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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Everspin Technologies, Inc. (NASDAQ:MRAM).
Everspin Technologies, Inc. (NASDAQ:MRAM) shareholders have witnessed a decrease in hedge fund sentiment recently. Everspin Technologies, Inc. (NASDAQ:MRAM) was in 4 hedge funds' portfolios at the end of September. The all time high for this statistics is 6. Our calculations also showed that MRAM isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Algert of Algert Global
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let's review the fresh hedge fund action regarding Everspin Technologies, Inc. (NASDAQ:MRAM).
How are hedge funds trading Everspin Technologies, Inc. (NASDAQ:MRAM)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MRAM over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce's Royce & Associates has the biggest position in Everspin Technologies, Inc. (NASDAQ:MRAM), worth close to $2.8 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions contain D. E. Shaw's D E Shaw, Peter Algert's Algert Global and . In terms of the portfolio weights assigned to each position Algert Global allocated the biggest weight to Everspin Technologies, Inc. (NASDAQ:MRAM), around 0.04% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to MRAM.
Due to the fact that Everspin Technologies, Inc. (NASDAQ:MRAM) has witnessed bearish sentiment from the smart money, it's safe to say that there is a sect of funds who sold off their positions entirely heading into Q4. Intriguingly, Israel Englander's Millennium Management said goodbye to the biggest investment of the "upper crust" of funds followed by Insider Monkey, valued at close to $0.3 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund dropped about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let's check out hedge fund activity in other stocks similar to Everspin Technologies, Inc. (NASDAQ:MRAM). We will take a look at Alaska Communications Systems Group Inc (NASDAQ:ALSK), BankFinancial Corporation (NASDAQ:BFIN), Reading International Inc (NASDAQ:RDIB), Reading International, Inc. (NASDAQ:RDI), SPI Energy Co., Ltd. (NASDAQ:SPI), Key Tronic Corporation (NASDAQ:KTCC), and Eloxx Pharmaceuticals, Inc. (NASDAQ:ELOX). This group of stocks' market values are closest to MRAM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALSK,9,8357,3 BFIN,4,7914,0 RDIB,1,267,0 RDI,8,12477,-6 SPI,1,3065,0 KTCC,1,1248,0 ELOX,1,157,0 Average,3.6,4784,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $4 million in MRAM's case. Alaska Communications Systems Group Inc (NASDAQ:ALSK) is the most popular stock in this table. On the other hand Reading International Inc (NASDAQ:RDIB) is the least popular one with only 1 bullish hedge fund positions. Everspin Technologies, Inc. (NASDAQ:MRAM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRAM is 41.8. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately MRAM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MRAM were disappointed as the stock returned -1.2% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.