Here is What Hedge Funds Think About IXYS Corporation (IXYS)

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

IXYS Corporation (NASDAQ:IXYS) was in 11 hedge funds’ portfolios at the end of September. IXYS investors should pay attention to a decrease in enthusiasm from smart money of late. There were 12 hedge funds in our database with IXYS positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tesco Corporation (USA) (NASDAQ:TESO), PennyMac Financial Services Inc (NYSE:PFSI), and AV Homes Inc (NASDAQ:AVHI) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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With all of this in mind, let’s take a glance at the new action regarding IXYS Corporation (NASDAQ:IXYS).

What have hedge funds been doing with IXYS Corporation (NASDAQ:IXYS)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 8% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards IXYS over the last 5 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the biggest position in IXYS Corporation (NASDAQ:IXYS), worth close to $21.6 million, amounting to 0.1% of its total 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $3.7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Renaissance Technologies, one of the largest hedge funds in the world, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on IXYS Corporation (NASDAQ:IXYS) and some hedge funds actually got rid of their positions entirely. Intriguingly, Michael Murphy and Daniel Donoghue’s Discovery Group got rid of the largest stake of all the investors watched by Insider Monkey, comprising about $5.2 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund dropped about $0.1 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks similar to IXYS Corporation (NASDAQ:IXYS). We will take a look at Tesco Corporation (USA) (NASDAQ:TESO), PennyMac Financial Services Inc (NYSE:PFSI), AV Homes Inc (NASDAQ:AVHI), and Steel Partners Holdings LP (NYSE:SPLP). This group of stocks’ market values are closest to IXYS’s market value.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $38 million in IXYS’s case. PennyMac Financial Services Inc (NYSE:PFSI) is the most popular stock in this table. On the other hand AV Homes Inc (NASDAQ:AVHI) is the least popular one with only 3 bullish hedge fund positions. IXYS Corporation (NASDAQ:IXYS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PFSI might be a better candidate to consider taking a long position in.

Disclosure: none.