Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees in 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the third quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Vishay Intertechnology, Inc. (NYSE:VSH).
Hedge fund interest in Vishay Intertechnology, Inc. (NYSE:VSH) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare VSH to other stocks including Atlantica Yield plc (NASDAQ:AY), Universal Forest Products, Inc. (NASDAQ:UFPI), and Box, Inc. (NYSE:BOX) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_26335" align="aligncenter" width="480"] Ken Fisher of Fisher Asset Management[/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. Let's go over the key hedge fund action regarding Vishay Intertechnology, Inc. (NYSE:VSH).
Hedge fund activity in Vishay Intertechnology, Inc. (NYSE:VSH)
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VSH over the last 17 quarters. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Vishay Intertechnology, Inc. (NYSE:VSH). AQR Capital Management has a $97.2 million position in the stock, comprising 0.1% of its 13F portfolio. On AQR Capital Management's heels is Fisher Asset Management, led by Ken Fisher, holding a $86.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism contain Chuck Royce's Royce & Associates, Renaissance Technologies and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Vishay Intertechnology, Inc. (NYSE:VSH), around 0.53% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, setting aside 0.41 percent of its 13F equity portfolio to VSH.
Because Vishay Intertechnology, Inc. (NYSE:VSH) has faced bearish sentiment from the smart money, it's easy to see that there were a few fund managers that slashed their full holdings in the third quarter. Interestingly, Paul Tudor Jones's Tudor Investment Corp dropped the biggest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $1.4 million in stock. David Andre and Astro Teller's fund, Cerebellum Capital, also said goodbye to its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to Vishay Intertechnology, Inc. (NYSE:VSH). These stocks are Atlantica Yield plc (NASDAQ:AY), Universal Forest Products, Inc. (NASDAQ:UFPI), Box, Inc. (NYSE:BOX), and Allegiant Travel Company (NASDAQ:ALGT). This group of stocks' market values are similar to VSH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AY,19,152882,1 UFPI,20,79055,3 BOX,31,553721,4 ALGT,16,530035,-2 Average,21.5,328923,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $329 million. That figure was $324 million in VSH's case. Box, Inc. (NYSE:BOX) is the most popular stock in this table. On the other hand Allegiant Travel Company (NASDAQ:ALGT) is the least popular one with only 16 bullish hedge fund positions. Vishay Intertechnology, Inc. (NYSE:VSH) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on VSH as the stock returned 17.5% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.