It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 24.4% during the first 9 months of 2019 and outperformed the S&P 500 ETF by 4 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Ichor Holdings, Ltd. (NASDAQ:ICHR) changed during the first quarter.
Is Ichor Holdings, Ltd. (NASDAQ:ICHR) worth your attention right now? The best stock pickers are getting less bullish. The number of bullish hedge fund positions shrunk by 2 recently. Our calculations also showed that ICHR isn’t among the 30 most popular stocks among hedge funds (see the video below).
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the latest hedge fund action encompassing Ichor Holdings, Ltd. (NASDAQ:ICHR).
How are hedge funds trading Ichor Holdings, Ltd. (NASDAQ:ICHR)?
At Q2’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ICHR over the last 16 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in Ichor Holdings, Ltd. (NASDAQ:ICHR), which was worth $19.2 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $14.7 million worth of shares. Moreover, Point72 Asset Management, Rubric Capital Management, and Citadel Investment Group were also bullish on Ichor Holdings, Ltd. (NASDAQ:ICHR), allocating a large percentage of their portfolios to this stock.
Due to the fact that Ichor Holdings, Ltd. (NASDAQ:ICHR) has experienced bearish sentiment from the smart money, logic holds that there was a specific group of funds that slashed their full holdings by the end of the second quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $4.6 million in stock. Mike Vranos’s fund, Ellington, also dumped its stock, about $0.3 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds by the end of the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ichor Holdings, Ltd. (NASDAQ:ICHR) but similarly valued. We will take a look at Rosetta Stone Inc (NYSE:RST), Antares Pharma Inc (NASDAQ:ATRS), Precision Drilling Corp (NYSE:PDS), and Tredegar Corporation (NYSE:TG). This group of stocks’ market values match ICHR’s market value.
|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 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $52 million in ICHR’s case. Rosetta Stone Inc (NYSE:RST) is the most popular stock in this table. On the other hand Precision Drilling Corp (NYSE:PDS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Ichor Holdings, Ltd. (NASDAQ:ICHR) is even less popular than PDS. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on ICHR, though not to the same extent, as the stock returned 2.3% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.