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In this article we will take a look at whether hedge funds think Pixelworks, Inc. (NASDAQ:PXLW) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Pixelworks, Inc. (NASDAQ:PXLW) a healthy stock for your portfolio? Investors who are in the know were getting more optimistic. The number of long hedge fund positions rose by 2 recently. Pixelworks, Inc. (NASDAQ:PXLW) was in 10 hedge funds' portfolios at the end of June. The all time high for this statistic is 12. Our calculations also showed that PXLW isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 8 hedge funds in our database with PXLW positions at the end of the first quarter.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. Keeping this in mind we're going to take a look at the latest hedge fund action encompassing Pixelworks, Inc. (NASDAQ:PXLW).
Do Hedge Funds Think PXLW Is A Good Stock To Buy Now?
At second quarter's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PXLW over the last 24 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the biggest position in Pixelworks, Inc. (NASDAQ:PXLW). Two Sigma Advisors has a $3.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Two Sigma Advisors's heels is Israel Englander of Millennium Management, with a $3.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Renaissance Technologies, D. E. Shaw's D E Shaw and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to Pixelworks, Inc. (NASDAQ:PXLW), around 0.02% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to PXLW.
As one would reasonably expect, some big names were leading the bulls' herd. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Pixelworks, Inc. (NASDAQ:PXLW). ExodusPoint Capital had $0.2 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $0.1 million investment in the stock during the quarter. The other funds with brand new PXLW positions are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners and Matthew L Pinz's Pinz Capital.
Let's also examine hedge fund activity in other stocks similar to Pixelworks, Inc. (NASDAQ:PXLW). These stocks are Energous Corporation (NASDAQ:WATT), Bel Fuse, Inc. (NASDAQ:BELFB), Gencor Industries, Inc. (NASDAQ:GENC), Orion Energy Systems, Inc. (NYSE:OESX), Sharps Compliance Corp. (NASDAQ:SMED), BBQ Holdings, Inc. (NASDAQ:BBQ), and Bancroft Fund Limited (NYSE:BCV). This group of stocks' market valuations match PXLW's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WATT,4,936,-2 BELFB,9,20347,1 GENC,4,25965,2 OESX,10,15444,0 SMED,15,20398,6 BBQ,6,87467,2 BCV,1,56,0 Average,7,24373,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $9 million in PXLW's case. Sharps Compliance Corp. (NASDAQ:SMED) is the most popular stock in this table. On the other hand Bancroft Fund Limited (NYSE:BCV) is the least popular one with only 1 bullish hedge fund positions. Pixelworks, Inc. (NASDAQ:PXLW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PXLW is 64.1. 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 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on PXLW as the stock returned 51% since the end of Q2 (through 9/27) 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.