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Is Hollysys Automation Technologies Ltd (NASDAQ:HOLI) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hollysys Automation Technologies Ltd (NASDAQ:HOLI) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 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 NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), ProPetro Holding Corp. (NYSE:PUMP), and Hyster-Yale Materials Handling Inc (NYSE:HY) to gather more data points. 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 below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most investors, hedge funds are perceived as worthless, old financial vehicles of years past. While there are greater than 8000 funds trading today, Our experts hone in on the aristocrats of this group, about 750 funds. These money managers oversee the majority of the smart money's total asset base, and by paying attention to their unrivaled equity investments, Insider Monkey has brought to light a few investment strategies that have historically exceeded the broader indices. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year 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 .
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Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to view the key hedge fund action encompassing Hollysys Automation Technologies Ltd (NASDAQ:HOLI).
What have hedge funds been doing with Hollysys Automation Technologies Ltd (NASDAQ:HOLI)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in HOLI a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Impax Asset Management was the largest shareholder of Hollysys Automation Technologies Ltd (NASDAQ:HOLI), with a stake worth $23.2 million reported as of the end of September. Trailing Impax Asset Management was Renaissance Technologies, which amassed a stake valued at $11.5 million. Millennium Management, Marshall Wace, and Arrowstreet Capital 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 Impax Asset Management allocated the biggest weight to Hollysys Automation Technologies Ltd (NASDAQ:HOLI), around 0.3% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to HOLI.
Seeing as Hollysys Automation Technologies Ltd (NASDAQ:HOLI) has faced falling interest from the aggregate hedge fund industry, it's easy to see that there was a specific group of hedgies that decided to sell off their positions entirely in the third quarter. Intriguingly, Seth Fischer's Oasis Management cut the largest position of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $5.7 million in call options, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund cut about $0.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Hollysys Automation Technologies Ltd (NASDAQ:HOLI). These stocks are NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), ProPetro Holding Corp. (NYSE:PUMP), Hyster-Yale Materials Handling Inc (NYSE:HY), and Republic Bancorp, Inc. KY (NASDAQ:RBCAA). This group of stocks' market values are closest to HOLI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NGM,9,18872,-1 PUMP,22,152253,-2 HY,14,33412,2 RBCAA,7,15262,1 Average,13,54950,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $61 million in HOLI's case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 7 bullish hedge fund positions. Hollysys Automation Technologies Ltd (NASDAQ:HOLI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately HOLI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HOLI investors were disappointed as the stock returned -1.7% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.