Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of GSI Technology, Inc. (NASDAQ:GSIT).
Is GSI Technology, Inc. (NASDAQ:GSIT) a healthy stock for your portfolio? The best stock pickers are becoming more confident. The number of long hedge fund bets inched up by 1 in recent months. Our calculations also showed that GSIT 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). GSIT was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. There were 5 hedge funds in our database with GSIT positions at the end of the previous quarter.
Video: 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 was 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 stocks recommended/scorned by legendary Bill Miller. We 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. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing GSI Technology, Inc. (NASDAQ:GSIT).
How have hedgies been trading GSI Technology, Inc. (NASDAQ:GSIT)?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards GSIT over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in GSI Technology, Inc. (NASDAQ:GSIT), which was worth $6.5 million at the end of the third quarter. On the second spot was Roumell Asset Management which amassed $3.9 million worth of shares. Ariel Investments, Winton Capital Management, 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 Roumell Asset Management allocated the biggest weight to GSI Technology, Inc. (NASDAQ:GSIT), around 10.61% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to GSIT.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in GSI Technology, Inc. (NASDAQ:GSIT). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks similar to GSI Technology, Inc. (NASDAQ:GSIT). We will take a look at X4 Pharmaceuticals, Inc. (NASDAQ:XFOR), CIM Commercial Trust Corporation (NASDAQ:CMCT), Nesco Holdings, Inc. (NYSE:NSCO), and Village Farms International, Inc. (NASDAQ:VFF). This group of stocks’ market caps are closest to GSIT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $14 million in GSIT’s case. Nesco Holdings, Inc. (NYSE:NSCO) is the most popular stock in this table. On the other hand Village Farms International, Inc. (NASDAQ:VFF) is the least popular one with only 3 bullish hedge fund positions. GSI Technology, Inc. (NASDAQ:GSIT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately GSIT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); GSIT investors were disappointed as the stock returned 6.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.