Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Amtech Systems, Inc. (NASDAQ:ASYS).
Amtech Systems, Inc. (NASDAQ:ASYS) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds' portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Applied Genetic Technologies Corp (NASDAQ:AGTC), Global Ship Lease, Inc. (NYSE:GSL), and Genocea Biosciences Inc (NASDAQ:GNCA) to gather more data points. Our calculations also showed that ASYS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are viewed as unimportant, outdated financial tools of years past. While there are more than 8000 funds with their doors open today, Our researchers hone in on the aristocrats of this club, approximately 750 funds. These hedge fund managers administer the majority of all hedge funds' total asset base, and by tracking their unrivaled investments, Insider Monkey has found a few investment strategies that have historically outperformed the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_193003" align="alignnone" width="600"] Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. We're going to go over the new hedge fund action regarding Amtech Systems, Inc. (NASDAQ:ASYS).
How have hedgies been trading Amtech Systems, Inc. (NASDAQ:ASYS)?
Heading into the fourth quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in ASYS a year ago. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Kokino LLC held the most valuable stake in Amtech Systems, Inc. (NASDAQ:ASYS), which was worth $11.9 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $4.2 million worth of shares. Harbert Management, Ancora Advisors, and Winton Capital Management 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 Kokino LLC allocated the biggest weight to Amtech Systems, Inc. (NASDAQ:ASYS), around 44.2% of its 13F portfolio. Harbert Management is also relatively very bullish on the stock, dishing out 5.27 percent of its 13F equity portfolio to ASYS.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Bailard Inc. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Winton Capital Management).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Amtech Systems, Inc. (NASDAQ:ASYS) but similarly valued. These stocks are Applied Genetic Technologies Corp (NASDAQ:AGTC), Global Ship Lease, Inc. (NYSE:GSL), Genocea Biosciences Inc (NASDAQ:GNCA), and Mersana Therapeutics, Inc. (NASDAQ:MRSN). This group of stocks' market values match ASYS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGTC,9,9346,4 GSL,11,22635,8 GNCA,11,15243,0 MRSN,13,21203,-1 Average,11,17107,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $21 million in ASYS's case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand Applied Genetic Technologies Corp (NASDAQ:AGTC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Amtech Systems, Inc. (NASDAQ:ASYS) is even less popular than AGTC. Hedge funds clearly dropped the ball on ASYS as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ASYS as the stock returned 12.8% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.