World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Vishay Intertechnology, Inc. (NYSE:VSH) undervalued? The smart money is in a pessimistic mood. The number of long hedge fund bets retreated by 3 recently. Our calculations also showed that vsh isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 32 percentage points since May 2014 through March 12, 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a gander at the key hedge fund action regarding Vishay Intertechnology, Inc. (NYSE:VSH).
How are hedge funds trading Vishay Intertechnology, Inc. (NYSE:VSH)?
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VSH over the last 14 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Vishay Intertechnology, Inc. (NYSE:VSH) was held by Royce & Associates, which reported holding $118.5 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $100.7 million position. Other investors bullish on the company included AQR Capital Management, Renaissance Technologies, and Two Sigma Advisors.
Because Vishay Intertechnology, Inc. (NYSE:VSH) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers who were dropping their positions entirely heading into Q3. Intriguingly, Ernest Chow and Jonathan Howe’s Sensato Capital Management sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising about $15.3 million in stock, and Leung Chi Kit’s Kadensa Capital was right behind this move, as the fund dropped about $4.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to Vishay Intertechnology, Inc. (NYSE:VSH). We will take a look at Smartsheet Inc. (NYSE:SMAR), Cabot Corporation (NYSE:CBT), Weight Watchers International, Inc. (NASDAQ:WTW), and Coherent, Inc. (NASDAQ:COHR). All of these stocks’ market caps match VSH’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 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $333 million in VSH’s case. Cabot Corporation (NYSE:CBT) is the most popular stock in this table. On the other hand Smartsheet Inc. (NYSE:SMAR) is the least popular one with only 17 bullish hedge fund positions. Vishay Intertechnology, Inc. (NYSE:VSH) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately VSH wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); VSH investors were disappointed as the stock returned 10.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.