It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Photronics, Inc. (NASDAQ:PLAB) changed during the first quarter.
Photronics, Inc. (NASDAQ:PLAB) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. PLAB was in 13 hedge funds’ portfolios at the end of the first quarter of 2019. There were 16 hedge funds in our database with PLAB positions at the end of the previous quarter. Our calculations also showed that PLAB isn’t among the 30 most popular stocks among hedge funds.
To the average investor there are tons of signals shareholders can use to appraise their holdings. A pair of the less utilized signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform the market by a superb margin (see the details here).
Let’s analyze the key hedge fund action surrounding Photronics, Inc. (NASDAQ:PLAB).
What does smart money think about Photronics, Inc. (NASDAQ:PLAB)?
At Q1’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in PLAB over the last 15 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the largest position in Photronics, Inc. (NASDAQ:PLAB), worth close to $24.7 million, amounting to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Royce & Associates, managed by Chuck Royce, which holds a $11.1 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions contain Steven Baughman’s Divisar Capital, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.
Because Photronics, Inc. (NASDAQ:PLAB) has witnessed declining sentiment from the smart money, logic holds that there exists a select few hedge funds that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Noam Gottesman’s GLG Partners dropped the biggest position of all the hedgies followed by Insider Monkey, comprising close to $7.4 million in stock. Noam Gottesman’s fund, GLG Partners, also cut its stock, about $1.5 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Photronics, Inc. (NASDAQ:PLAB) but similarly valued. We will take a look at Kura Oncology, Inc. (NASDAQ:KURA), Acorda Therapeutics Inc (NASDAQ:ACOR), Clean Energy Fuels Corp (NASDAQ:CLNE), and i3 Verticals, Inc. (NASDAQ:IIIV). This group of stocks’ market caps are closest to PLAB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KURA | 17 | 207125 | 2 |
| ACOR | 22 | 161061 | 0 |
| CLNE | 11 | 32009 | 3 |
| IIIV | 8 | 66259 | 0 |
| Average | 14.5 | 116614 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $68 million in PLAB’s case. Acorda Therapeutics Inc (NASDAQ:ACOR) is the most popular stock in this table. On the other hand i3 Verticals, Inc. (NASDAQ:IIIV) is the least popular one with only 8 bullish hedge fund positions. Photronics, Inc. (NASDAQ:PLAB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately PLAB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PLAB investors were disappointed as the stock returned -14.1% 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
