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Here is What Hedge Funds Think About Cohu, Inc. (COHU)

In this article you are going to find out whether hedge funds think Cohu, Inc. (NASDAQ:COHU) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Cohu, Inc. (NASDAQ:COHU) was in 8 hedge funds’ portfolios at the end of March. COHU investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 6 hedge funds in our database with COHU holdings at the end of the previous quarter. Our calculations also showed that COHU 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.

In today’s marketplace there are plenty of signals investors have at their disposal to evaluate stocks. A pair of the most under-the-radar signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce their index-focused peers by a healthy amount (see the details here).

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the recent hedge fund action regarding Cohu, Inc. (NASDAQ:COHU).

How have hedgies been trading Cohu, Inc. (NASDAQ:COHU)?

Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in COHU a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Is COHU A Good Stock To Buy?

More specifically, Renaissance Technologies was the largest shareholder of Cohu, Inc. (NASDAQ:COHU), with a stake worth $21.5 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $10.3 million. Millennium Management, D E Shaw, and Citadel Investment Group 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 Royce & Associates allocated the biggest weight to Cohu, Inc. (NASDAQ:COHU), around 0.14% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to COHU.

As industrywide interest jumped, key hedge funds have jumped into Cohu, Inc. (NASDAQ:COHU) headfirst. Millennium Management, managed by Israel Englander, assembled the most valuable position in Cohu, Inc. (NASDAQ:COHU). Millennium Management had $1.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.7 million investment in the stock during the quarter. The other funds with brand new COHU positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Cohu, Inc. (NASDAQ:COHU). These stocks are Quanterix Corporation (NASDAQ:QTRX), Luther Burbank Corporation (NASDAQ:LBC), Tucows Inc. (NYSE:TCX), and Castle Biosciences, Inc. (NASDAQ:CSTL). All of these stocks’ market caps are closest to COHU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
QTRX 10 45063 -2
LBC 5 5784 -4
TCX 10 54926 2
CSTL 9 49460 1
Average 8.5 38808 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $35 million in COHU’s case. Quanterix Corporation (NASDAQ:QTRX) is the most popular stock in this table. On the other hand Luther Burbank Corporation (NASDAQ:LBC) is the least popular one with only 5 bullish hedge fund positions. Cohu, Inc. (NASDAQ:COHU) 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on COHU as the stock returned 35.6% 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.