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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Hollysys Automation Technologies Ltd (NASDAQ:HOLI).
Is HOLI a good stock to buy now? Hollysys Automation Technologies Ltd (NASDAQ:HOLI) was in 13 hedge funds' portfolios at the end of September. The all time high for this statistic is 22. HOLI has experienced an increase in activity from the world's largest hedge funds in recent months. There were 10 hedge funds in our database with HOLI holdings at the end of June. Our calculations also showed that HOLI 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
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 15 best blue chip stocks 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. 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 website. With all of this in mind we're going to view the new hedge fund action encompassing Hollysys Automation Technologies Ltd (NASDAQ:HOLI).
Do Hedge Funds Think HOLI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in HOLI over the last 21 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Yiheng Capital, managed by Jonathan Guo, holds the most valuable position in Hollysys Automation Technologies Ltd (NASDAQ:HOLI). Yiheng Capital has a $31.7 million position in the stock, comprising 1.9% of its 13F portfolio. On Yiheng Capital's heels is Renaissance Technologies, holding a $18.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain D. E. Shaw's D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Paul Marshall and Ian Wace's Marshall Wace LLP. In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Hollysys Automation Technologies Ltd (NASDAQ:HOLI), around 1.91% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to HOLI.
Now, key money managers were leading the bulls' herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most valuable position in Hollysys Automation Technologies Ltd (NASDAQ:HOLI). Marshall Wace LLP had $3.9 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $2.6 million investment in the stock during the quarter. The only other fund with a brand new HOLI position is Matthew Hulsizer's PEAK6 Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Hollysys Automation Technologies Ltd (NASDAQ:HOLI) but similarly valued. We will take a look at IES Holdings, Inc. (NASDAQ:IESC), UP Fintech Holding Limited (NASDAQ:TIGR), Quotient Technology Inc (NYSE:QUOT), Eastman Kodak Co. (NYSE:KODK), Immatics N.V. (NASDAQ:IMTX), Himax Technologies, Inc. (NASDAQ:HIMX), and Meta Financial Group Inc. (NASDAQ:CASH). This group of stocks' market caps match HOLI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IESC,9,412002,1 TIGR,6,5195,2 QUOT,15,304245,2 KODK,15,53830,12 IMTX,22,161638,22 HIMX,6,42466,-3 CASH,6,41879,-10 Average,11.3,145894,3.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $75 million in HOLI's case. Immatics N.V. (NASDAQ:IMTX) is the most popular stock in this table. On the other hand UP Fintech Holding Limited (NASDAQ:TIGR) is the least popular one with only 6 bullish hedge fund positions. Hollysys Automation Technologies Ltd (NASDAQ:HOLI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOLI is 47.6. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on HOLI as the stock returned 31.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.