Hedge Funds Begin to Sour on Kulicke and Soffa Industries Inc. (KLIC)

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) has seen a decrease in enthusiasm from smart money lately. KLIC was in 18 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with KLIC holdings at the end of the previous quarter. At the end of this article we will also compare KLIC to other stocks including Genomic Health, Inc. (NASDAQ:GHDX), S & T Bancorp Inc (NASDAQ:STBA), and ClubCorp Holdings Inc (NYSE:MYCC) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Kulicke and Soffa Industries Inc. (NASDAQ:KLIC)?

Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 22% from the second quarter of 2016. On the other hand, there were a total of 19 hedge funds with a bullish position in KLIC at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the most valuable position in Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), worth close to $30.7 million. On Renaissance Technologies’ heels is Chuck Royce of Royce & Associates, with a $21.7 million position. Other members of the smart money with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David E. Shaw’s D E Shaw, and Ernest Chow and Jonathan Howe’s Sensato Capital Management. We should note that Sensato Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. It’s worth mentioning that First Eagle Investment Management said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, worth close to $4.9 million in stock. John Hurley’s fund, Cavalry Asset Management, also cut its stock, about $3.5 million worth.

Let’s now take a look at hedge fund activity in other stocks similar to Kulicke and Soffa Industries Inc. (NASDAQ:KLIC). We will take a look at Genomic Health, Inc. (NASDAQ:GHDX), S & T Bancorp Inc (NASDAQ:STBA), ClubCorp Holdings Inc (NYSE:MYCC), and P.H. Glatfelter Company (NYSE:GLT). All of these stocks’ market caps resemble KLIC’s market cap.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $94 million in KLIC’s case. Genomic Health, Inc. (NASDAQ:GHDX) is the most popular stock in this table. On the other hand S & T Bancorp Inc (NASDAQ:STBA) is the least popular one with only 5 bullish hedge fund positions. Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GHDX might be a better candidate to consider taking a long position in.

Disclosure: None