Hedge Funds Are Souring On Amkor Technology, Inc. (AMKR)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Amkor Technology, Inc. (NASDAQ:AMKR) based on that data and determine whether they were really smart about the stock.

Is Amkor Technology, Inc. (NASDAQ:AMKR) a marvelous investment right now? Investors who are in the know were turning less bullish. The number of long hedge fund bets shrunk by 5 recently. Amkor Technology, Inc. (NASDAQ:AMKR) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistics is 29. Our calculations also showed that AMKR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 28 hedge funds in our database with AMKR positions at the end of the first quarter.

Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Ray Dalio of Bridgewater Associates

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a peek at the latest hedge fund action encompassing Amkor Technology, Inc. (NASDAQ:AMKR).

Hedge fund activity in Amkor Technology, Inc. (NASDAQ:AMKR)

At second quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in AMKR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Arrowstreet Capital was the largest shareholder of Amkor Technology, Inc. (NASDAQ:AMKR), with a stake worth $25.8 million reported as of the end of September. Trailing Arrowstreet Capital was Shellback Capital, which amassed a stake valued at $18.4 million. D E Shaw, Royce & Associates, and Renaissance Technologies 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 Shellback Capital allocated the biggest weight to Amkor Technology, Inc. (NASDAQ:AMKR), around 1.92% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.32 percent of its 13F equity portfolio to AMKR.

Due to the fact that Amkor Technology, Inc. (NASDAQ:AMKR) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedge funds who were dropping their full holdings heading into Q3. Interestingly, Andy Redleaf’s Whitebox Advisors said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $0.9 million in stock. Steve Cohen’s fund, Point72 Asset Management, also cut its stock, about $0.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 5 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks similar to Amkor Technology, Inc. (NASDAQ:AMKR). We will take a look at Sabra Health Care REIT Inc (NASDAQ:SBRA), Atlantica Sustainable Infrastructure plc (NASDAQ:AY), Grupo Televisa SAB (NYSE:TV), Radian Group Inc (NYSE:RDN), JetBlue Airways Corporation (NASDAQ:JBLU), Safehold Inc. (NYSE:SAFE), and Eagle Materials, Inc. (NYSE:EXP). This group of stocks’ market caps match AMKR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SBRA 18 161098 1
AY 12 76409 -1
TV 21 426090 2
RDN 33 190994 5
JBLU 28 131834 -8
SAFE 7 7836 2
EXP 41 428808 7
Average 22.9 203296 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $125 million in AMKR’s case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand Safehold Inc. (NYSE:SAFE) is the least popular one with only 7 bullish hedge fund positions. Amkor Technology, Inc. (NASDAQ:AMKR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMKR is 47.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately AMKR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AMKR were disappointed as the stock returned -9% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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