Is Cohu, Inc. (COHU) Going to Burn These Hedge Funds?

We can judge whether Cohu, Inc. (NASDAQ:COHU) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.

Is Cohu, Inc. (NASDAQ:COHU) ready to rally soon? The best stock pickers are getting more optimistic. The number of bullish hedge fund bets increased by 5 lately. Our calculations also showed that cohu isn’t among the 30 most popular stocks among hedge funds. COHU was in 15 hedge funds’ portfolios at the end of the third quarter of 2018. There were 10 hedge funds in our database with COHU positions at the end of the previous quarter.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

We’re going to check out the recent hedge fund action regarding Cohu, Inc. (NASDAQ:COHU).

How have hedgies been trading Cohu, Inc. (NASDAQ:COHU)?

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in COHU heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with COHU Positions

Among these funds, Royce & Associates held the most valuable stake in Cohu, Inc. (NASDAQ:COHU), which was worth $39.6 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $15.3 million worth of shares. Moreover, D E Shaw, Millennium Management, and Two Sigma Advisors were also bullish on Cohu, Inc. (NASDAQ:COHU), allocating a large percentage of their portfolios to this stock.

Now, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, created the most valuable position in Cohu, Inc. (NASDAQ:COHU). Millennium Management had $8.4 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $1 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Jonathan Soros’s JS Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cohu, Inc. (NASDAQ:COHU) but similarly valued. These stocks are Oritani Financial Corp. (NASDAQ:ORIT), Costamare Inc (NYSE:CMRE), BBX Capital Corporation (NYSE:BBX), and SpartanNash Company (NASDAQ:SPTN). This group of stocks’ market caps resemble COHU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ORIT 8 39981 -3
CMRE 8 24453 1
BBX 15 65225 1
SPTN 14 41519 -3
Average 11.25 42795 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $84 million in COHU’s case. BBX Capital Corporation (NYSE:BBX) is the most popular stock in this table. On the other hand Oritani Financial Corp. (NASDAQ:ORIT) is the least popular one with only 8 bullish hedge fund positions. Cohu, Inc. (NASDAQ:COHU) 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. In this regard BBX might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.