The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of SMTC Corporation (NASDAQ:SMTX).
Is SMTC Corporation (NASDAQ:SMTX) a buy here? Investors who are in the know are turning less bullish. The number of long hedge fund positions fell by 1 lately. Our calculations also showed that SMTX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the recent hedge fund action regarding SMTC Corporation (NASDAQ:SMTX).
How have hedgies been trading SMTC Corporation (NASDAQ:SMTX)?
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in SMTX a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Nelson Obus’s Wynnefield Capital has the most valuable position in SMTC Corporation (NASDAQ:SMTX), worth close to $4.6 million, accounting for 4.4% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $0.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Wynnefield Capital allocated the biggest weight to SMTC Corporation (NASDAQ:SMTX), around 4.38% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.0048 percent of its 13F equity portfolio to SMTX.
Due to the fact that SMTC Corporation (NASDAQ:SMTX) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedgies that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising close to $0.1 million in stock, and Mark Broach’s Manatuck Hill Partners was right behind this move, as the fund said goodbye to about $0 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as SMTC Corporation (NASDAQ:SMTX) but similarly valued. These stocks are China XD Plastics Co Ltd (NASDAQ:CXDC), EDAP TMS S.A. (NASDAQ:EDAP), Immunic, Inc. (NASDAQ:IMUX), and Global Ship Lease, Inc. (NYSE:GSL). This group of stocks’ market caps are similar to SMTX’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 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $6 million in SMTX’s case. Global Ship Lease, Inc. (NYSE:GSL) is the most popular stock in this table. On the other hand China XD Plastics Co Ltd (NASDAQ:CXDC) is the least popular one with only 2 bullish hedge fund positions. SMTC Corporation (NASDAQ:SMTX) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on SMTX as the stock returned 27% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.