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Kulicke and Soffa Industries Inc. (KLIC): Hedge Funds Are Cashing Out

Asma UL Husna

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Kulicke and Soffa Industries Inc. (NASDAQ:KLIC)?

Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) was in 19 hedge funds' portfolios at the end of March. KLIC investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. There were 22 hedge funds in our database with KLIC holdings at the end of the previous quarter. Our calculations also showed that KLIC isn't among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_193003" align="aligncenter" width="392"] Chuck Royce of Royce & Associates[/caption]

Chuck Royce

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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a peek at the key hedge fund action surrounding Kulicke and Soffa Industries Inc. (NASDAQ:KLIC).

How have hedgies been trading Kulicke and Soffa Industries Inc. (NASDAQ:KLIC)?

At Q1's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in KLIC 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.

The largest stake in Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) was held by Whale Rock Capital Management, which reported holding $82.6 million worth of stock at the end of September. It was followed by Royce & Associates with a $57.8 million position. Other investors bullish on the company included D E Shaw, Divisar Capital, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Divisar Capital allocated the biggest weight to Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), around 5.43% of its 13F portfolio. No Street Capital is also relatively very bullish on the stock, setting aside 1.43 percent of its 13F equity portfolio to KLIC.

Since Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) has witnessed a decline in interest from the aggregate hedge fund industry, it's easy to see that there exists a select few fund managers who sold off their entire stakes by the end of the first quarter. Intriguingly, Ravee Mehta's Nishkama Capital cut the largest stake of the "upper crust" of funds tracked by Insider Monkey, worth about $10.4 million in stock. Israel Englander's fund, Millennium Management, also said goodbye to its stock, about $10 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds by the end of the first quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) but similarly valued. We will take a look at Cortexyme, Inc. (NASDAQ:CRTX), AtriCure Inc. (NASDAQ:ATRC), Green Dot Corporation (NYSE:GDOT), and Brooge Energy Limited (NASDAQ:BROG). All of these stocks' market caps are similar to KLIC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRTX,6,14838,5 ATRC,20,185400,2 GDOT,22,376626,-1 BROG,7,49414,4 Average,13.75,156570,2.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $231 million in KLIC's case. Green Dot Corporation (NYSE:GDOT) is the most popular stock in this table. On the other hand Cortexyme, Inc. (NASDAQ:CRTX) is the least popular one with only 6 bullish hedge fund positions. Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) is not the most popular stock in this group but hedge fund interest is still above average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately KLIC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on KLIC were disappointed as the stock returned 8.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.

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