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 Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Logitech International SA (NASDAQ:LOGI).
Logitech International SA (NASDAQ:LOGI) was in 13 hedge funds’ portfolios at the end of the fourth quarter of 2019. LOGI shareholders have witnessed a decrease in hedge fund interest lately. There were 16 hedge funds in our database with LOGI positions at the end of the previous quarter. Our calculations also showed that LOGI 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).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Lee Ainslie of Maverick 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. With all of this in mind let’s take a gander at the new hedge fund action regarding Logitech International SA (NASDAQ:LOGI).
What have hedge funds been doing with Logitech International SA (NASDAQ:LOGI)?
Heading into the first quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in LOGI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Logitech International SA (NASDAQ:LOGI), which was worth $115.1 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $63.5 million worth of shares. Two Sigma Advisors, Arrowstreet Capital, and Maverick 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 Marshall Wace LLP allocated the biggest weight to Logitech International SA (NASDAQ:LOGI), around 0.44% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.4 percent of its 13F equity portfolio to LOGI.
Since Logitech International SA (NASDAQ:LOGI) has experienced declining sentiment from hedge fund managers, we can see that there was a specific group of money managers that elected to cut their full holdings by the end of the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest position of the 750 funds tracked by Insider Monkey, worth about $8.1 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $3.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Logitech International SA (NASDAQ:LOGI). These stocks are Bruker Corporation (NASDAQ:BRKR), GDS Holdings Limited (NASDAQ:GDS), A. O. Smith Corporation (NYSE:AOS), and Albemarle Corporation (NYSE:ALB). This group of stocks’ market valuations resemble LOGI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRKR | 25 | 262302 | 3 |
| GDS | 34 | 1466278 | 2 |
| AOS | 26 | 396644 | 3 |
| ALB | 23 | 116420 | 5 |
| Average | 27 | 560411 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $560 million. That figure was $256 million in LOGI’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand Albemarle Corporation (NYSE:ALB) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Logitech International SA (NASDAQ:LOGI) is even less popular than ALB. Hedge funds dodged a bullet by taking a bearish stance towards LOGI. 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 LOGI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LOGI investors were disappointed as the stock returned -28.1% 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.
