Hedge Funds Have Never Been This Bullish On Cohu, Inc. (COHU)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Cohu, Inc. (NASDAQ:COHU) based on those filings.

Is Cohu, Inc. (NASDAQ:COHU) a buy here? Hedge funds were taking a bullish view. The number of bullish hedge fund positions rose by 12 in recent months. Cohu, Inc. (NASDAQ:COHU) was in 25 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that COHU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 13 hedge funds in our database with COHU holdings at the end of December.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s review the new hedge fund action regarding Cohu, Inc. (NASDAQ:COHU).

Do Hedge Funds Think COHU Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 92% from the fourth quarter of 2020. On the other hand, there were a total of 8 hedge funds with a bullish position in COHU a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Royce & Associates was the largest shareholder of Cohu, Inc. (NASDAQ:COHU), with a stake worth $41.3 million reported as of the end of March. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $34 million. Driehaus Capital, AIGH Investment Partners, 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 AIGH Investment Partners allocated the biggest weight to Cohu, Inc. (NASDAQ:COHU), around 5.86% of its 13F portfolio. Glaxis Capital Management is also relatively very bullish on the stock, setting aside 1.87 percent of its 13F equity portfolio to COHU.

As one would reasonably expect, key hedge funds have been driving this bullishness. Driehaus Capital, managed by Richard Driehaus, initiated the biggest position in Cohu, Inc. (NASDAQ:COHU). Driehaus Capital had $30.2 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also made a $7.8 million investment in the stock during the quarter. The other funds with brand new COHU positions are Paul Tudor Jones’s Tudor Investment Corp, Matthew L Pinz’s Pinz Capital, and Paul Holland and Matthew Miller’s Glaxis Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Cohu, Inc. (NASDAQ:COHU) but similarly valued. We will take a look at B&G Foods, Inc. (NYSE:BGS), Two Harbors Investment Corp (NYSE:TWO), California Resources Corporation (NYSE:CRC), Piper Sandler Companies (NYSE:PIPR), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), Itau CorpBanca (NYSE:ITCB), and Patrick Industries, Inc. (NASDAQ:PATK). This group of stocks’ market valuations are closest to COHU’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $223 million in COHU’s case. Two Harbors Investment Corp (NYSE:TWO) is the most popular stock in this table. On the other hand Itau CorpBanca (NYSE:ITCB) is the least popular one with only 2 bullish hedge fund positions. Cohu, Inc. (NASDAQ:COHU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COHU is 78.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately COHU wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on COHU were disappointed as the stock returned -14.6% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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