ACM Research, Inc. (ACMR): Hedge Funds In Wait-and-See Mode

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtACM Research, Inc. (NASDAQ:ACMR) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Hedge fund interest in ACM Research, Inc. (NASDAQ:ACMR) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Banco BBVA Argentina S.A. (NYSE:BBAR), Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), and Universal Electronics Inc (NASDAQ:UEIC) to gather more data points. Our calculations also showed that ACMR 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the latest hedge fund action surrounding ACM Research, Inc. (NASDAQ:ACMR).

How are hedge funds trading ACM Research, Inc. (NASDAQ:ACMR)?

Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in ACMR over the last 18 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.

Is ACMR A Good Stock To Buy?

The largest stake in ACM Research, Inc. (NASDAQ:ACMR) was held by Indus Capital, which reported holding $36.4 million worth of stock at the end of September. It was followed by Millennium Management with a $1.6 million position. Other investors bullish on the company included Yiheng Capital, Citadel Investment Group, and Oasis Management. In terms of the portfolio weights assigned to each position Indus Capital allocated the biggest weight to ACM Research, Inc. (NASDAQ:ACMR), around 6.16% of its 13F portfolio. Oasis Management is also relatively very bullish on the stock, setting aside 0.85 percent of its 13F equity portfolio to ACMR.

Since ACM Research, Inc. (NASDAQ:ACMR) has faced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds who were dropping their positions entirely last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $2.2 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its stock, about $0.5 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ACM Research, Inc. (NASDAQ:ACMR) but similarly valued. We will take a look at Banco BBVA Argentina S.A. (NYSE:BBAR), Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), Universal Electronics Inc (NASDAQ:UEIC), and Sleep Number Corporation (NASDAQ:SNBR). This group of stocks’ market valuations resemble ACMR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBAR 8 4407 -1
GLDD 20 78403 -5
UEIC 13 21742 1
SNBR 20 64714 0
Average 15.25 42317 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $44 million in ACMR’s case. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) 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 8 bullish hedge fund positions. ACM Research, Inc. (NASDAQ:ACMR) is not the least popular stock in this group but hedge fund interest is still below average. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on ACMR as the stock returned 110.6% during the second quarter and outperformed the market by an even larger margin.

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