Is Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2-and-20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform poorly at times, but their consensus picks have historically outperformed the market after risk adjustments.
Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) has seen a decrease in hedge fund interest recently, with it now being contained in the portfolios of 20 investors from our database, down by one. At the end of this article, we will also compare Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) to other stocks including Ameris Bancorp (NASDAQ:ABCB), Primoris Services Corp (NASDAQ:PRIM), and Barnes & Noble, Inc. (NYSE:BKS) to get a better sense of its popularity.
According to most stock holders, hedge funds are assumed to be slow, old financial tools of years past. While there are more than 8,000 funds with their doors open at present, hedge fund experts at Insider Monkey hone in on the moguls of this club, about 700 funds. These investment experts have their hands on the majority of the hedge fund industry’s total asset base, and by keeping track of their unrivaled investments, Insider Monkey has figured out a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points a year for a decade in its backtests.
Keeping this in mind, let’s take a gander at the latest action surrounding Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO).
What have hedge funds been doing with Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO)?
Heading into Q4, a total of 20 of the hedge funds tracked by Insider Monkey were bullish in this stock, a decline of 5% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO). Millennium Management has an $18.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting in the number two spot is Brian Ashford-Russell and Tim Woolley of Polar Capital, with a $15.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Richard Driehaus’ Driehaus Capital, Ken Griffin’s Citadel Investment Group, and Clifford Fox’s Columbus Circle Investors.
Since Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few money managers that slashed their positions entirely in the third quarter. At the top of the heap, Steve Cohen’s family office, Point72 Asset Management, dropped the largest stake of the 700 funds monitored by Insider Monkey, worth close to $3.5 million in stock, while Christopher Medlock James of Partner Fund Management was right behind this move, as he said goodbye to about $2.3 million worth of shares. These transactions are interesting, as aggregate hedge fund interest was cut by one fund in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO). We will take a look at Ameris Bancorp (NASDAQ:ABCB), Primoris Services Corp (NASDAQ:PRIM), Barnes & Noble, Inc. (NYSE:BKS), and Gray Television, Inc. (NYSE:GTN). All of these stocks’ market caps resemble Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $125 million, slightly above the $133 million invested in Silicon Motion. Gray Television, Inc. (NYSE:GTN) is the most popular stock in this table. On the other hand Primoris Services Corp (NASDAQ:PRIM) is the least popular one with only six bullish hedge fund positions. Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Gray Television, Inc. (NYSE:GTN) might be a better candidate to consider a long position in.