Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged during the first quarter. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 40% and 25% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the first 5 months of 2019 and outperformed the broader market benchmark by 6.6 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Logitech International SA (NASDAQ:LOGI) investors should pay attention to an increase in hedge fund interest in recent months. Our calculations also showed that LOGI isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the recent hedge fund action encompassing Logitech International SA (NASDAQ:LOGI).
Hedge fund activity in Logitech International SA (NASDAQ:LOGI)
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in LOGI a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Logitech International SA (NASDAQ:LOGI), which was worth $100 million at the end of the first quarter. On the second spot was Marshall Wace LLP which amassed $45.1 million worth of shares. Moreover, Two Sigma Advisors, Columbus Circle Investors, and D E Shaw were also bullish on Logitech International SA (NASDAQ:LOGI), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Logitech International SA (NASDAQ:LOGI). Arrowstreet Capital had $4.5 million invested in the company at the end of the quarter. Thomas Bailard’s Bailard Inc also initiated a $0.2 million position during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Logitech International SA (NASDAQ:LOGI) but similarly valued. We will take a look at Aqua America Inc (NYSE:WTR), Pool Corporation (NASDAQ:POOL), Phillips 66 Partners LP (NYSE:PSXP), and KT Corporation (NYSE:KT). This group of stocks’ market caps are closest to LOGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WTR | 15 | 138874 | -4 |
| POOL | 16 | 248823 | -1 |
| PSXP | 4 | 9165 | -2 |
| KT | 19 | 267347 | 3 |
| Average | 13.5 | 166052 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $240 million in LOGI’s case. KT Corporation (NYSE:KT) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 4 bullish hedge fund positions. Logitech International SA (NASDAQ:LOGI) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately LOGI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LOGI were disappointed as the stock returned -2.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
