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Where Do Hedge Funds Stand On Atomera Incorporated (ATOM)?

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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Atomera Incorporated (NASDAQ:ATOM) to find out whether there were any major changes in hedge funds' views.

Atomera Incorporated (NASDAQ:ATOM) was in 6 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ATOM has experienced an increase in hedge fund interest in recent months. There were 4 hedge funds in our database with ATOM positions at the end of the fourth quarter. Our calculations also showed that ATOM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Alan Howard
Alan Howard

Alan Howard of Brevan Howard

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. With all of this in mind let's take a glance at the latest hedge fund action surrounding Atomera Incorporated (NASDAQ:ATOM).

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

At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the fourth quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in ATOM a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Atomera Incorporated (NASDAQ:ATOM) was held by Citadel Investment Group, which reported holding $8.9 million worth of stock at the end of December. It was followed by OZ Management with a $3.1 million position. Other investors bullish on the company included Brevan Howard, Citadel Investment Group, and Caxton Associates LP. In terms of the portfolio weights assigned to each position Brevan Howard allocated the biggest weight to Atomera Incorporated (NASDAQ:ATOM), around 0.39% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to ATOM.

As aggregate interest increased, specific money managers have been driving this bullishness. Brevan Howard, managed by Alan Howard, created the biggest position in Atomera Incorporated (NASDAQ:ATOM). Brevan Howard had $2.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $1.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is Greg Eisner's Engineers Gate Manager.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Atomera Incorporated (NASDAQ:ATOM) but similarly valued. These stocks are Aldeyra Therapeutics Inc (NASDAQ:ALDX), HighPeak Energy, Inc. (NASDAQ:HPK), Hess Midstream LP (NYSE:HESM), Duluth Holdings Inc. (NASDAQ:DLTH), Earthstone Energy, Inc. (NYSE:ESTE), Banco BBVA Argentina S.A. (NYSE:BBAR), and Ennis, Inc. (NYSE:EBF). This group of stocks' market values resemble ATOM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALDX,17,153970,0 HPK,7,2296,6 HESM,9,23621,2 DLTH,7,12684,-5 ESTE,8,15574,2 BBAR,4,3005,0 EBF,8,70320,0 Average,8.6,40210,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $8 million in ATOM's case. Aldeyra Therapeutics Inc (NASDAQ:ALDX) is the most popular stock in this table. On the other hand Banco BBVA Argentina S.A. (NYSE:BBAR) is the least popular one with only 4 bullish hedge fund positions. Atomera Incorporated (NASDAQ:ATOM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ATOM is 44.7. 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. 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 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately ATOM wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ATOM investors were disappointed as the stock returned -4.2% since the end of March (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 in 2021.

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