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Did Hedge Funds Drop The Ball On Amkor Technology, Inc. (AMKR)?

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Amkor Technology, Inc. (NASDAQ:AMKR).

Is Amkor Technology, Inc. (NASDAQ:AMKR) the right investment to pursue these days? The smart money is taking a bearish view. The number of long hedge fund bets shrunk by 6 recently. Our calculations also showed that AMKR isn’t among the 30 most popular stocks among hedge funds (see the video below). AMKR was in 19 hedge funds’ portfolios at the end of the second quarter of 2019. There were 25 hedge funds in our database with AMKR positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

AMKR_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to go over the new hedge fund action encompassing Amkor Technology, Inc. (NASDAQ:AMKR).

How are hedge funds trading Amkor Technology, Inc. (NASDAQ:AMKR)?

At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in AMKR over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

John Overdeck of Two Sigma

Of the funds tracked by Insider Monkey, D. E. Shaw’s D E Shaw has the biggest position in Amkor Technology, Inc. (NASDAQ:AMKR), worth close to $18.4 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $17.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish consist of Cliff Asness’s AQR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Since Amkor Technology, Inc. (NASDAQ:AMKR) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of fund managers that elected to cut their full holdings heading into Q3. Intriguingly, Andy Redleaf’s Whitebox Advisors sold off the largest investment of the 750 funds monitored by Insider Monkey, comprising about $1 million in stock, and Minhua Zhang’s Weld Capital Management was right behind this move, as the fund dropped about $0.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds heading into Q3.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Amkor Technology, Inc. (NASDAQ:AMKR) but similarly valued. These stocks are TransAlta Corporation (NYSE:TAC), USANA Health Sciences, Inc. (NYSE:USNA), Tower Semiconductor Ltd. (NASDAQ:TSEM), and Goosehead Insurance, Inc. (NASDAQ:GSHD). This group of stocks’ market valuations match AMKR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TAC 9 29727 -2
USNA 13 248443 -9
TSEM 11 236662 -1
GSHD 7 30448 3
Average 10 136320 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $73 million in AMKR’s case. USANA Health Sciences, Inc. (NYSE:USNA) is the most popular stock in this table. On the other hand Goosehead Insurance, Inc. (NASDAQ:GSHD) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Amkor Technology, Inc. (NASDAQ:AMKR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on AMKR as the stock returned 22% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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