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How Hedge Funds Traded Aehr Test Systems (AEHR) During The Crash

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Aehr Test Systems (NASDAQ:AEHR) based on those filings.

Aehr Test Systems (NASDAQ:AEHR) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare AEHR to other stocks including Sachem Capital Corp. (NYSE:SACH), 1895 Bancorp of Wisconsin, Inc. (NASDAQ:BCOW), and Broadway Financial Corporation (NASDAQ:BYFC) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are tons of methods stock market investors put to use to grade publicly traded companies. A couple of the less utilized methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform the S&P 500 by a healthy amount (see the details here).

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Jim Simons Founder of Renaissance Technologies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s view the new hedge fund action surrounding Aehr Test Systems (NASDAQ:AEHR).

Hedge fund activity in Aehr Test Systems (NASDAQ:AEHR)

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AEHR over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Aehr Test Systems (NASDAQ:AEHR), worth close to $2.2 million, accounting for less than 0.1%% of its total 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, holding a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Aehr Test Systems (NASDAQ:AEHR), around 0.03% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to AEHR.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s go over hedge fund activity in other stocks similar to Aehr Test Systems (NASDAQ:AEHR). We will take a look at Sachem Capital Corp. (NYSE:SACH), 1895 Bancorp of Wisconsin, Inc. (NASDAQ:BCOW), Broadway Financial Corporation (NASDAQ:BYFC), and Guardion Health Sciences, Inc. (NASDAQ:GHSI). This group of stocks’ market caps match AEHR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SACH 2 434 -1
BCOW 1 109 0
BYFC 1 27 0
GHSI 1 6 0
Average 1.25 144 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.25 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $2 million in AEHR’s case. Sachem Capital Corp. (NYSE:SACH) is the most popular stock in this table. On the other hand 1895 Bancorp of Wisconsin, Inc. (NASDAQ:BCOW) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Aehr Test Systems (NASDAQ:AEHR) is more popular among hedge funds. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. Unfortunately AEHR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AEHR were disappointed as the stock returned -1.8% during the second quarter (through May 22nd) 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.