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Here is What Hedge Funds Think About Amkor Technology, Inc. (AMKR)

·6 min read

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Amkor Technology, Inc. (NASDAQ:AMKR).

Amkor Technology, Inc. (NASDAQ:AMKR) shareholders have witnessed a decrease in hedge fund sentiment lately. Amkor Technology, Inc. (NASDAQ:AMKR) was in 20 hedge funds' portfolios at the end of March. The all time high for this statistic is 29. There were 24 hedge funds in our database with AMKR holdings at the end of December. Our calculations also showed that AMKR 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.

Matthew Hulsizer PEAK6 Capital
Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 we're going to take a gander at the new hedge fund action regarding Amkor Technology, Inc. (NASDAQ:AMKR).

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

At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in AMKR a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, SW Investment Management was the largest shareholder of Amkor Technology, Inc. (NASDAQ:AMKR), with a stake worth $47.4 million reported as of the end of March. Trailing SW Investment Management was Arrowstreet Capital, which amassed a stake valued at $42.1 million. Royce & Associates, Bandera Partners, and Verdad Advisers 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 SW Investment Management allocated the biggest weight to Amkor Technology, Inc. (NASDAQ:AMKR), around 22.21% of its 13F portfolio. Bandera Partners is also relatively very bullish on the stock, setting aside 6.27 percent of its 13F equity portfolio to AMKR.

Because Amkor Technology, Inc. (NASDAQ:AMKR) has faced a decline in interest from hedge fund managers, it's easy to see that there was a specific group of fund managers that elected to cut their entire stakes by the end of the first quarter. It's worth mentioning that Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital sold off the largest investment of the 750 funds watched by Insider Monkey, totaling close to $16.2 million in stock. Israel Englander's fund, Millennium Management, also said goodbye to its stock, about $14.1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds by the end of the first quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Amkor Technology, Inc. (NASDAQ:AMKR) but similarly valued. We will take a look at OneConnect Financial Technology Co., Ltd. (NYSE:OCFT), Healthequity Inc (NASDAQ:HQY), TFS Financial Corporation (NASDAQ:TFSL), Lemonade, Inc. (NYSE:LMND), SunPower Corporation (NASDAQ:SPWR), Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), and National Instruments Corporation (NASDAQ:NATI). This group of stocks' market valuations are similar to AMKR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OCFT,10,70885,5 HQY,18,221317,-2 TFSL,6,145686,-4 LMND,16,159616,3 SPWR,18,182419,-6 OLLI,24,194324,3 NATI,21,248825,3 Average,16.1,174725,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $172 million in AMKR's case. Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) is the most popular stock in this table. On the other hand TFS Financial Corporation (NASDAQ:TFSL) is the least popular one with only 6 bullish hedge fund positions. Amkor Technology, Inc. (NASDAQ:AMKR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMKR is 60.6. 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 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately AMKR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AMKR were disappointed as the stock returned -7.5% since the end of March (through 7/16) 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 many of these stocks already outperformed the market since 2019.

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