Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about II-VI, Inc. (NASDAQ:IIVI) in this article.
II-VI, Inc. (NASDAQ:IIVI) was in 39 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. IIVI has experienced an increase in activity from the world’s largest hedge funds of late. There were 26 hedge funds in our database with IIVI positions at the end of the fourth quarter. Our calculations also showed that IIVI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Paul Marshall of Marshall Wace
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the key hedge fund action regarding II-VI, Inc. (NASDAQ:IIVI).
Do Hedge Funds Think IIVI Is A Good Stock To Buy Now?
At first quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IIVI over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Atreides Management was the largest shareholder of II-VI, Inc. (NASDAQ:IIVI), with a stake worth $40.4 million reported as of the end of March. Trailing Atreides Management was Renaissance Technologies, which amassed a stake valued at $35.8 million. Select Equity Group, Citadel Investment Group, and Citadel Investment Group 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 Divisar Capital allocated the biggest weight to II-VI, Inc. (NASDAQ:IIVI), around 3.26% of its 13F portfolio. Provenire Capital is also relatively very bullish on the stock, earmarking 1.88 percent of its 13F equity portfolio to IIVI.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Atreides Management, managed by Gavin Baker, established the biggest position in II-VI, Inc. (NASDAQ:IIVI). Atreides Management had $40.4 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $35.8 million position during the quarter. The other funds with brand new IIVI positions are Carl Tiedemann and Michael Tiedemann’s TIG Advisors, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Scott Bessent’s Key Square Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as II-VI, Inc. (NASDAQ:IIVI) but similarly valued. We will take a look at Sealed Air Corporation (NYSE:SEE), TCF Financial Corporation (NYSE:TCF), Starwood Property Trust, Inc. (NYSE:STWD), Royal Gold, Inc (NASDAQ:RGLD), Sotera Health Company (NASDAQ:SHC), Exelixis, Inc. (NASDAQ:EXEL), and United States Steel Corporation (NYSE:X). This group of stocks’ market caps are similar to IIVI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SEE | 27 | 765215 | -5 |
| TCF | 13 | 398544 | -1 |
| STWD | 10 | 176663 | -3 |
| RGLD | 17 | 237026 | -9 |
| SHC | 36 | 609684 | 9 |
| EXEL | 27 | 992164 | 3 |
| X | 22 | 635515 | -15 |
| Average | 21.7 | 544973 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $545 million. That figure was $267 million in IIVI’s case. Sotera Health Company (NASDAQ:SHC) is the most popular stock in this table. On the other hand Starwood Property Trust, Inc. (NYSE:STWD) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks II-VI, Inc. (NASDAQ:IIVI) is more popular among hedge funds. Our overall hedge fund sentiment score for IIVI is 90. 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 gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Unfortunately IIVI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IIVI were disappointed as the stock returned 3.9% since the end of the first quarter (through 6/25) 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 most of these stocks already outperformed the market since 2019.
Follow Coherent Corp. (NASDAQ:COHR)
Follow Coherent Corp. (NASDAQ:COHR)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 15 Biggest E-Commerce Companies in China
- 25 Worst Major Cities for Allergies in 2020
Disclosure: None. This article was originally published at Insider Monkey.
