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Hedge Funds Had Impeccable Timing Buying Amkor Technology, Inc. (AMKR)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Amkor Technology, Inc. (NASDAQ:AMKR).

Is Amkor Technology, Inc. (NASDAQ:AMKR) a healthy stock for your portfolio? Prominent investors are becoming more confident. The number of bullish hedge fund bets moved up by 6 in recent months. Our calculations also showed that AMKR 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.

Chuck Royce

Chuck Royce of Royce & Associates

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the fresh hedge fund action surrounding Amkor Technology, Inc. (NASDAQ:AMKR).

How are hedge funds trading Amkor Technology, Inc. (NASDAQ:AMKR)?

At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AMKR over the last 17 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

No of Hedge Funds with AMKR Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the most valuable position in Amkor Technology, Inc. (NASDAQ:AMKR). Renaissance Technologies has a $21.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by D E Shaw, led by David E. Shaw, holding a $21.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’s AQR Capital Management and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Amkor Technology, Inc. (NASDAQ:AMKR), around 0.69% of its portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.38 percent of its 13F equity portfolio to AMKR.

As industrywide interest jumped, key hedge funds have jumped into Amkor Technology, Inc. (NASDAQ:AMKR) headfirst. Marshall Wace, managed by Paul Marshall and Ian Wace, established the most valuable position in Amkor Technology, Inc. (NASDAQ:AMKR). Marshall Wace had $4.9 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also made a $2.1 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Donald Sussman’s Paloma Partners, and Bruce Kovner’s Caxton Associates.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Amkor Technology, Inc. (NASDAQ:AMKR) but similarly valued. We will take a look at Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), PQ Group Holdings Inc. (NYSE:PQG), PriceSmart, Inc. (NASDAQ:PSMT), and Northwest Natural Holding Company (NYSE:NWN). This group of stocks’ market caps resemble AMKR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BHVN 34 455638 -4
PQG 7 55742 1
PSMT 9 50814 -6
NWN 16 63875 4
Average 16.5 156517 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $116 million in AMKR’s case. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is the most popular stock in this table. On the other hand PQ Group Holdings Inc. (NYSE:PQG) 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 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 AMKR as the stock returned 32.9% 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.

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