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Is Viomi Technology Co., Ltd (VIOT) Going to Burn These Hedge Funds?

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In this article we will analyze whether Viomi Technology Co., Ltd (NASDAQ:VIOT) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Viomi Technology Co., Ltd (NASDAQ:VIOT) investors should pay attention to an increase in hedge fund sentiment recently. Viomi Technology Co., Ltd (NASDAQ:VIOT) was in 6 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. Our calculations also showed that VIOT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Sussman Paloma Partners
Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Now we're going to analyze the recent hedge fund action surrounding Viomi Technology Co., Ltd (NASDAQ:VIOT).

Do Hedge Funds Think VIOT Is A Good Stock To Buy Now?

At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in VIOT over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the most valuable position in Viomi Technology Co., Ltd (NASDAQ:VIOT). Renaissance Technologies has a $4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $0.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Philip Best's Quaero Capital, Donald Sussman's Paloma Partners and Michael Gelband's ExodusPoint Capital. In terms of the portfolio weights assigned to each position Quaero Capital allocated the biggest weight to Viomi Technology Co., Ltd (NASDAQ:VIOT), around 0.31% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to VIOT.

Now, key money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, assembled the most valuable position in Viomi Technology Co., Ltd (NASDAQ:VIOT). Millennium Management had $0.7 million invested in the company at the end of the quarter. Philip Best's Quaero Capital also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Donald Sussman's Paloma Partners and Michael Gelband's ExodusPoint Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Viomi Technology Co., Ltd (NASDAQ:VIOT) but similarly valued. These stocks are Haverty Furniture Companies, Inc. (NYSE:HVT), Mitek Systems, Inc. (NASDAQ:MITK), Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), Vapotherm, Inc. (NYSE:VAPO), Midland States Bancorp, Inc. (NASDAQ:MSBI), Chatham Lodging Trust (NYSE:CLDT), and Luther Burbank Corporation (NASDAQ:LBC). This group of stocks' market values are similar to VIOT's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HVT,13,75604,-2 MITK,15,75980,-2 RRGB,9,18687,0 VAPO,13,140684,-2 MSBI,7,9312,-2 CLDT,14,61893,1 LBC,6,7247,1 Average,11,55630,-0.9 [/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 $56 million. That figure was $6 million in VIOT's case. Mitek Systems, Inc. (NASDAQ:MITK) is the most popular stock in this table. On the other hand Luther Burbank Corporation (NASDAQ:LBC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Viomi Technology Co., Ltd (NASDAQ:VIOT) is even less popular than LBC. Our overall hedge fund sentiment score for VIOT is 31.7. 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. Hedge funds dodged a bullet by taking a bearish stance towards VIOT. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately VIOT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); VIOT investors were disappointed as the stock returned -8.6% since the end of the first quarter (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.