Silicon Motion Technology Corp. (SIMO): Are Hedge Funds Right About This Stock?

In this article we will check out the progression of hedge fund sentiment towards Silicon Motion Technology Corp. (NASDAQ:SIMO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Silicon Motion Technology Corp. (NASDAQ:SIMO) has experienced an increase in support from the world’s most elite money managers recently. Silicon Motion Technology Corp. (NASDAQ:SIMO) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. There were 20 hedge funds in our database with SIMO holdings at the end of June. Our calculations also showed that SIMO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to review the latest hedge fund action regarding Silicon Motion Technology Corp. (NASDAQ:SIMO).

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

Do Hedge Funds Think SIMO Is A Good Stock To Buy Now?

At third quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2021. On the other hand, there were a total of 15 hedge funds with a bullish position in SIMO 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.

Among these funds, Cardinal Capital held the most valuable stake in Silicon Motion Technology Corp. (NASDAQ:SIMO), which was worth $173.6 million at the end of the third quarter. On the second spot was Yiheng Capital which amassed $107 million worth of shares. Millennium Management, GLG Partners, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position AIGH Investment Partners allocated the biggest weight to Silicon Motion Technology Corp. (NASDAQ:SIMO), around 6.12% of its 13F portfolio. Yiheng Capital is also relatively very bullish on the stock, earmarking 5.27 percent of its 13F equity portfolio to SIMO.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. AIGH Investment Partners, managed by Orin Hirschman, established the most valuable position in Silicon Motion Technology Corp. (NASDAQ:SIMO). AIGH Investment Partners had $29.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $14.9 million investment in the stock during the quarter. The following funds were also among the new SIMO investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Jinghua Yan’s TwinBeech Capital, and Phil Frohlich’s Prescott Group Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Silicon Motion Technology Corp. (NASDAQ:SIMO) but similarly valued. We will take a look at Yatsen Holding Limited (NYSE:YSG), Xometry Inc. (NASDAQ:XMTR), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), South Jersey Industries Inc (NYSE:SJI), Doma Holdings Inc. (NYSE:DOMA), PriceSmart, Inc. (NASDAQ:PSMT), and Victory Capital Holdings, Inc. (NASDAQ:VCTR). This group of stocks’ market caps match SIMO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
YSG 11 113504 -7
XMTR 18 236161 18
SBGI 20 437301 0
SJI 17 115783 3
DOMA 16 246762 16
PSMT 17 39637 6
VCTR 15 77107 1
Average 16.3 180894 5.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $525 million in SIMO’s case. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is the most popular stock in this table. On the other hand Yatsen Holding Limited (NYSE:YSG) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Silicon Motion Technology Corp. (NASDAQ:SIMO) is more popular among hedge funds. Our overall hedge fund sentiment score for SIMO is 79.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 29.6% in 2021 and managed to beat the market by 3.6 percentage points. Hedge funds were also right about betting on SIMO as the stock returned 38.8% since the end of September (through 12/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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