Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 20% in 2019 (through September 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 24% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Vishay Intertechnology, Inc. (NYSE:VSH).
Vishay Intertechnology, Inc. (NYSE:VSH) investors should be aware of a decrease in hedge fund interest in recent months. Our calculations also showed that VSH isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the key hedge fund action surrounding Vishay Intertechnology, Inc. (NYSE:VSH).
How are hedge funds trading Vishay Intertechnology, Inc. (NYSE:VSH)?
At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VSH over the last 16 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Vishay Intertechnology, Inc. (NYSE:VSH) was held by Fisher Asset Management, which reported holding $85.6 million worth of stock at the end of March. It was followed by AQR Capital Management with a $74.5 million position. Other investors bullish on the company included Royce & Associates, Renaissance Technologies, and Gotham Asset Management.
Seeing as Vishay Intertechnology, Inc. (NYSE:VSH) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that elected to cut their full holdings last quarter. At the top of the heap, Matthew Hulsizer’s PEAK6 Capital Management sold off the biggest position of all the hedgies tracked by Insider Monkey, valued at an estimated $1.3 million in stock, and Jeffrey Talpins’s Element Capital Management was right behind this move, as the fund dropped about $1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Vishay Intertechnology, Inc. (NYSE:VSH) but similarly valued. These stocks are Revolve Group, Inc. (NYSE:RVLV), Covanta Holding Corporation (NYSE:CVA), Nelnet, Inc. (NYSE:NNI), and First Bancorp (NYSE:FBP). This group of stocks’ market caps are closest to VSH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RVLV | 15 | 52196 | 15 |
| CVA | 15 | 102764 | -3 |
| NNI | 13 | 94103 | -2 |
| FBP | 23 | 214538 | 5 |
| Average | 16.5 | 115900 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $298 million in VSH’s case. First Bancorp (NYSE:FBP) is the most popular stock in this table. On the other hand Nelnet, Inc. (NYSE:NNI) is the least popular one with only 13 bullish hedge fund positions. Vishay Intertechnology, Inc. (NYSE:VSH) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on VSH, though not to the same extent, as the stock returned 3.1% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
