Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider ASE Technology Holding Co., Ltd. (NYSE:ASX) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
ASE Technology Holding Co., Ltd. (NYSE:ASX) shareholders have witnessed an increase in support from the world’s most elite money managers lately. ASX was in 10 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 8 hedge funds in our database with ASX holdings at the end of the previous quarter. Our calculations also showed that ASX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 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.
Charles Davidson of Wexford Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the fresh hedge fund action encompassing ASE Technology Holding Co., Ltd. (NYSE:ASX).
What does smart money think about ASE Technology Holding Co., Ltd. (NYSE:ASX)?
At the end of the fourth quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in ASX a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ASE Technology Holding Co., Ltd. (NYSE:ASX) was held by Fisher Asset Management, which reported holding $180.3 million worth of stock at the end of September. It was followed by LMR Partners with a $33 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Wexford Capital. In terms of the portfolio weights assigned to each position LMR Partners allocated the biggest weight to ASE Technology Holding Co., Ltd. (NYSE:ASX), around 1.57% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, earmarking 0.18 percent of its 13F equity portfolio to ASX.
As aggregate interest increased, some big names have been driving this bullishness. Wexford Capital, managed by Charles Davidson and Joseph Jacobs, assembled the biggest position in ASE Technology Holding Co., Ltd. (NYSE:ASX). Wexford Capital had $0.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.5 million investment in the stock during the quarter. The other funds with brand new ASX positions are James Chen’s Ovata Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s check out hedge fund activity in other stocks similar to ASE Technology Holding Co., Ltd. (NYSE:ASX). We will take a look at Huazhu Group Limited (NASDAQ:HTHT), VICI Properties Inc. (NYSE:VICI), LINE Corporation (NYSE:LN), and The Trade Desk, Inc. (NASDAQ:TTD). This group of stocks’ market caps are similar to ASX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HTHT | 18 | 258810 | 2 |
| VICI | 37 | 1826674 | -3 |
| LN | 13 | 96390 | 5 |
| TTD | 24 | 368569 | -2 |
| Average | 23 | 637611 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $638 million. That figure was $232 million in ASX’s case. VICI Properties Inc. (NYSE:VICI) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks ASE Technology Holding Co., Ltd. (NYSE:ASX) is even less popular than LN. Hedge funds dodged a bullet by taking a bearish stance towards ASX. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately ASX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ASX investors were disappointed as the stock returned -35.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
