ASML Holding N.V. (ADR) (NASDAQ:ASML) reported its financial results this morning for the second quarter ending June 2015. The semiconductor equipment provider reported net earnings of €370 million ($410 million) for the quarter, 7.3% less than the same period a year ago. ASML Holding N.V. (ADR) (NASDAQ:ASML) also reported revenues of €1.65 billion ($1.81 billion) for the quarter. The company managed to beat the FactSet forecast of €354 million ($388 million) in earnings on revenue of €1.61 billion ($1.76 billion). ASML holding also expects third quarter sales of between €1.5 – €1.6 billion ($1.64 – $1.75 billion) with a gross margin of around 45%. The company reported opening a new EUV (Extreme Ultraviolet Lithography) factory in Veldhoven, the Netherlands, where its corporate headquarters are located, and believes the technology is nearing volume production. The company also expects to ship its TWINSCAN NXT:1980Di system later this year, which has demonstrated a performance improvement to 275 wafers per hour. With bookings increasing greatly during the second quarter to over €1.5 billion ($1.64 billion), the company expects revenue for fiscal 2015 to top 2014’s. Shares are up by 4.39% in morning trading.
At the end of the first quarter, a total of ten of the hedge funds tracked by Insider Monkey held long positions in ASML Holding N.V. (ADR) (NASDAQ:ASML), with around a $339.36 million investment in the stock, around 15% more than the aggregate capital invested by 12 hedge funds at the end of December 2014. Meanwhile, the stock lost around 6.5% of its value during the January – March period. This shows that the hedge funds invested a lot more in the stock during the first three months, expecting strong future performance from the company, despite some hedge funds’ decision to pull out of the stock.
Most investors don’t understand hedge funds and indicators that are based on hedge fund and insider activity. They ignore hedge funds because of their recent poor performance in the long-running bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns enjoyed (or not) by investors. We uncovered through extensive research that hedge funds’ long positions in small-cap stocks actually greatly outperformed the market from 1999 to 2012, and built a system around this. The 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 80 percentage points since the end of August 2012 when this system went live, returning a cumulative 140% vs. less than 60% for the S&P 500 Index (read the details).
Likewise, other research (not our own) has shown insider purchases are also effective piggybacking methods for investors that lead to greater returns. That’s why we believe investors should pay attention to what hedge funds and insiders are buying and keep them apprised of this information. There have been no insider purchases or sales of shares of ASML so far in 2015.
With all of this in mind, let’s take a glance at the latest hedge fund activity encompassing ASML Holding N.V. (ADR) (NASDAQ:ASML).
Hedge fund activity in ASML Holding N.V. (ADR) (NASDAQ:ASML)
When looking at the hedgies followed by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke, and John Campbell, holds the most valuable position in ASML Holding N.V. (ADR) (NASDAQ:ASML). Arrowstreet Capital had around 2.2 million shares valued at $222.4 million at the end of March, comprising 1.4% of its 13F portfolio. Sitting in the second spot is Fisher Asset Management, led by Ken Fisher, holding around 642,019 shares valued at $64.9 million; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Malcolm Fairbairn’s Ascend Capital, Noam Gottesman‘s GLG Partners, and Ken Griffin‘s Citadel Investment Group.
There were few hedge fund managers who said good bye to the stock during the same period, which includes John Smith Clark’s Southpoint Capital Advisors, which sold all of its 300,000 shares during the quarter, and Benjamin A. Smith of Laurion Capital Management was right behind this move, as the fund manager sold all of his 100,000 shares.
Hedge funds opted to pour more money into the stock during the first three months and they were right to do so as ASML Holding N.V. (ADR) (NASDAQ:ASML) posted strong financial results for second quarter, in addition to strong guidance for the third quarter. The stock has also made a big jump in trading today. Considering the positive outlook from the company for its third quarter and hedge funds’ bullish behavior, we recommend buying this stock at the moment.
Disclosure: None
