Is Ichor Holdings Ltd. (NASDAQ:ICHR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is ICHR a good stock to buy now? Ichor Holdings Ltd. (NASDAQ:ICHR) has seen a decrease in support from the world’s most elite money managers of late. Ichor Holdings Ltd. (NASDAQ:ICHR) was in 13 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. Our calculations also showed that ICHR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to go over the key hedge fund action surrounding Ichor Holdings Ltd. (NASDAQ:ICHR).
Do Hedge Funds Think ICHR Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in ICHR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ichor Holdings Ltd. (NASDAQ:ICHR) was held by Royce & Associates, which reported holding $8.7 million worth of stock at the end of September. It was followed by Intrinsic Edge Capital with a $6.9 million position. Other investors bullish on the company included Arrowstreet Capital, Intrinsic Edge Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Boardman Bay Capital Management allocated the biggest weight to Ichor Holdings Ltd. (NASDAQ:ICHR), around 0.55% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, dishing out 0.47 percent of its 13F equity portfolio to ICHR.
Because Ichor Holdings Ltd. (NASDAQ:ICHR) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few fund managers that decided to sell off their entire stakes heading into Q4. Intriguingly, Noam Gottesman’s GLG Partners dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $1.8 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dumped about $1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Ichor Holdings Ltd. (NASDAQ:ICHR). These stocks are MeiraGTx Holdings plc (NASDAQ:MGTX), ProSight Global, Inc. (NYSE:PROS), Enova International Inc (NYSE:ENVA), Clean Energy Fuels Corp (NASDAQ:CLNE), CEL-SCI Corporation (NYSE:CVM), ADTRAN, Inc. (NASDAQ:ADTN), and Hawkins, Inc. (NASDAQ:HWKN). All of these stocks’ market caps match ICHR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $32 million in ICHR’s case. Enova International Inc (NYSE:ENVA) is the most popular stock in this table. On the other hand CEL-SCI Corporation (NYSE:CVM) is the least popular one with only 5 bullish hedge fund positions. Ichor Holdings Ltd. (NASDAQ:ICHR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ICHR is 48.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ICHR as the stock returned 68.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.