Hedge Funds Aren’t Done Buying ASML Holding N.V. (ASML)

In this article we will check out the progression of hedge fund sentiment towards ASML Holding N.V. (NASDAQ:ASML) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is ASML Holding N.V. (NASDAQ:ASML) the right investment to pursue these days? Money managers are in an optimistic mood. The number of bullish hedge fund bets advanced by 8 in recent months. Our calculations also showed that ASML 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.


Ken Fisher of Fisher Asset Management

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 trades like this oneWe 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. Now let’s review the latest hedge fund action encompassing ASML Holding N.V. (NASDAQ:ASML).

How have hedgies been trading ASML Holding N.V. (NASDAQ:ASML)?

At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in ASML a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Fisher Asset Management, managed by Ken Fisher, holds the largest position in ASML Holding N.V. (NASDAQ:ASML). Fisher Asset Management has a $903.6 million position in the stock, comprising 1.1% of its 13F portfolio. On Fisher Asset Management’s heels is Alkeon Capital Management, managed by Panayotis Takis Sparaggis, which holds a $146.4 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other peers that are bullish encompass Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Keywise Capital Management allocated the biggest weight to ASML Holding N.V. (NASDAQ:ASML), around 8.05% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, setting aside 3.04 percent of its 13F equity portfolio to ASML.

As one would reasonably expect, specific money managers have been driving this bullishness. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, created the largest position in ASML Holding N.V. (NASDAQ:ASML). Alkeon Capital Management had $146.4 million invested in the company at the end of the quarter. Fang Zheng’s Keywise Capital Management also initiated a $29.7 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Rob Citrone’s Discovery Capital Management, and Mark Coe’s Intrinsic Edge Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ASML Holding N.V. (NASDAQ:ASML) but similarly valued. These stocks are Sanofi (NASDAQ:SNY), Accenture Plc (NYSE:ACN), Charter Communications, Inc. (NASDAQ:CHTR), and International Business Machines Corp. (NYSE:IBM). All of these stocks’ market caps are similar to ASML’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNY 15 970814 -16
ACN 49 1003250 8
CHTR 104 9914920 39
IBM 41 902956 -9
Average 52.25 3197985 5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 52.25 hedge funds with bullish positions and the average amount invested in these stocks was $3198 million. That figure was $1505 million in ASML’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand Sanofi (NASDAQ:SNY) is the least popular one with only 15 bullish hedge fund positions. ASML Holding N.V. (NASDAQ:ASML) is not the least popular stock in this group but hedge fund interest is still below average. 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 and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on ASML as the stock returned 26.6% during the second quarter and outperformed the market by an even larger margin.

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