Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards EMCORE Corporation (NASDAQ:EMKR) changed recently.
EMCORE Corporation (NASDAQ:EMKR) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of June. Our calculations also showed that EMKR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare EMKR to other stocks including Horizon Technology Finance Corp (NASDAQ:HRZN), Full House Resorts, Inc. (NASDAQ:FLL), and Sigilon Therapeutics, Inc. (NASDAQ:SGTX) to get a better sense of its popularity.
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
Keeping this in mind we’re going to take a look at the latest hedge fund action encompassing EMCORE Corporation (NASDAQ:EMKR).
Do Hedge Funds Think EMKR Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in EMKR a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, AIGH Investment Partners was the largest shareholder of EMCORE Corporation (NASDAQ:EMKR), with a stake worth $31.1 million reported as of the end of June. Trailing AIGH Investment Partners was Cannell Capital, which amassed a stake valued at $23.6 million. Renaissance Technologies, Royce & Associates, and Arrowstreet Capital 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 EMCORE Corporation (NASDAQ:EMKR), around 5.59% of its 13F portfolio. Cannell Capital is also relatively very bullish on the stock, earmarking 3.79 percent of its 13F equity portfolio to EMKR.
Due to the fact that EMCORE Corporation (NASDAQ:EMKR) has experienced bearish sentiment from the smart money, it’s safe to say that there were a few funds that decided to sell off their full holdings last quarter. Intriguingly, John W. Rogers’s Ariel Investments sold off the largest stake of all the hedgies tracked by Insider Monkey, worth an estimated $1 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also said goodbye to its stock, about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to EMCORE Corporation (NASDAQ:EMKR). These stocks are Horizon Technology Finance Corp (NASDAQ:HRZN), Full House Resorts, Inc. (NASDAQ:FLL), Sigilon Therapeutics, Inc. (NASDAQ:SGTX), EZCORP Inc (NASDAQ:EZPW), Syros Pharmaceuticals, Inc. (NASDAQ:SYRS), VOXX International Corp (NASDAQ:VOXX), and Tufin Software Technologies Ltd. (NYSE:TUFN). This group of stocks’ market values are closest to EMKR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HRZN | 1 | 3388 | 0 |
| FLL | 19 | 83384 | -2 |
| SGTX | 6 | 7155 | -3 |
| EZPW | 18 | 57422 | 5 |
| SYRS | 17 | 48713 | -1 |
| VOXX | 13 | 47166 | 2 |
| TUFN | 11 | 12672 | 5 |
| Average | 12.1 | 37129 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $90 million in EMKR’s case. Full House Resorts, Inc. (NASDAQ:FLL) is the most popular stock in this table. On the other hand Horizon Technology Finance Corp (NASDAQ:HRZN) is the least popular one with only 1 bullish hedge fund positions. EMCORE Corporation (NASDAQ:EMKR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EMKR is 85. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately EMKR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EMKR were disappointed as the stock returned -23.1% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Emcore Corp (NASDAQ:EMKR)
Follow Emcore Corp (NASDAQ:EMKR)
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Disclosure: None. This article was originally published at Insider Monkey.
