Did Hedge Funds Dropped The Ball On Cohu, Inc. (COHU)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Cohu, Inc. (NASDAQ:COHU).

Is Cohu, Inc. (NASDAQ:COHU) a buy here? Money managers are in a bullish mood. The number of bullish hedge fund positions rose by 1 recently. Our calculations also showed that COHU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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. 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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Jim Simons of Renaissance Technologies

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 take a look at the new hedge fund action regarding Cohu, Inc. (NASDAQ:COHU).

Hedge fund activity in Cohu, Inc. (NASDAQ:COHU)

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in COHU a year ago. 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 COHU A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Cohu, Inc. (NASDAQ:COHU), which was worth $17.9 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $14.6 million worth of shares. VIEX Capital Advisors, D E Shaw, and Intrinsic Edge Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position VIEX Capital Advisors allocated the biggest weight to Cohu, Inc. (NASDAQ:COHU), around 3.18% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.19 percent of its 13F equity portfolio to COHU.

As aggregate interest increased, some big names have been driving this bullishness. VIEX Capital Advisors, managed by Eric Singer, created the biggest position in Cohu, Inc. (NASDAQ:COHU). VIEX Capital Advisors had $5.4 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $1.7 million position during the quarter. The following funds were also among the new COHU investors: Paul Tudor Jones’s Tudor Investment Corp, Matthew Hulsizer’s PEAK6 Capital Management, and Ken Griffin’s Citadel Investment Group.

Let’s check out hedge fund activity in other stocks similar to Cohu, Inc. (NASDAQ:COHU). These stocks are Whitestone REIT (NYSE:WSR), Wanda Sports Group Company Limited (NASDAQ:WSG), The First Bancshares, Inc. (MS) (NASDAQ:FBMS), and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN). All of these stocks’ market caps resemble COHU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WSR 1 18218 -3
WSG 5 13083 5
FBMS 8 32584 1
SCHN 11 22473 -1
Average 6.25 21590 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $46 million in COHU’s case. Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) is the most popular stock in this table. On the other hand Whitestone REIT (NYSE:WSR) is the least popular one with only 1 bullish hedge fund positions. Cohu, Inc. (NASDAQ:COHU) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on COHU as the stock returned 31.7% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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