The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Viomi Technology Co., Ltd (NASDAQ:VIOT).
Is Viomi Technology Co., Ltd (NASDAQ:VIOT) a bargain? Money managers are becoming less confident. The number of long hedge fund positions were cut by 2 in recent months. Our calculations also showed that VIOT 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the latest hedge fund action encompassing Viomi Technology Co., Ltd (NASDAQ:VIOT).
How are hedge funds trading Viomi Technology Co., Ltd (NASDAQ:VIOT)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in VIOT a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Serenity Capital was the largest shareholder of Viomi Technology Co., Ltd (NASDAQ:VIOT), with a stake worth $12.2 million reported as of the end of September. Trailing Serenity Capital was Renaissance Technologies, which amassed a stake valued at $1.9 million. Millennium Management, Two Sigma Advisors, and Marshall Wace LLP 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 Serenity Capital allocated the biggest weight to Viomi Technology Co., Ltd (NASDAQ:VIOT), around 2.61% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0019 percent of its 13F equity portfolio to VIOT.
Because Viomi Technology Co., Ltd (NASDAQ:VIOT) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds that elected to cut their full holdings heading into Q4. At the top of the heap, Ken Griffin’s Citadel Investment Group dropped the biggest position of all the hedgies tracked by Insider Monkey, valued at close to $0.1 million in stock, and C. Ashton Newhall and James Lim’s Greenspring Associates was right behind this move, as the fund sold off about $0 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Viomi Technology Co., Ltd (NASDAQ:VIOT). We will take a look at Pfenex Inc (NYSE:PFNX), US Concrete Inc (NASDAQ:USCR), Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), and Dynavax Technologies Corporation (NASDAQ:DVAX). This group of stocks’ market caps are similar to VIOT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $15 million in VIOT’s case. Pfenex Inc (NYSE:PFNX) is the most popular stock in this table. On the other hand Dynavax Technologies Corporation (NASDAQ:DVAX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Viomi Technology Co., Ltd (NASDAQ:VIOT) is even less popular than DVAX. 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 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on VIOT, though not to the same extent, as the stock returned 18.9% during the second quarter (through the end of May) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.