The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Aehr Test Systems (NASDAQ:AEHR).
Aehr Test Systems (NASDAQ:AEHR) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 6. AEHR shareholders have witnessed an increase in hedge fund interest of late. There were 2 hedge funds in our database with AEHR holdings at the end of June. Our calculations also showed that AEHR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: 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’ 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 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Chuck Royce of Royce & Associates
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to take a glance at the fresh hedge fund action encompassing Aehr Test Systems (NASDAQ:AEHR).
How have hedgies been trading Aehr Test Systems (NASDAQ:AEHR)?
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AEHR over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Aehr Test Systems (NASDAQ:AEHR), with a stake worth $1.8 million reported as of the end of September. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $0 million. Minerva Advisors was 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 Royce & Associates allocated the biggest weight to Aehr Test Systems (NASDAQ:AEHR), around 0.02% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to AEHR.
As industrywide interest jumped, specific money managers were breaking ground themselves. Renaissance Technologies, created the largest position in Aehr Test Systems (NASDAQ:AEHR). Renaissance Technologies had $0 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Aehr Test Systems (NASDAQ:AEHR) but similarly valued. These stocks are aTyr Pharma Inc. (NASDAQ:LIFE), Amplify Energy Corp. (NYSE:AMPY), Monaker Group, Inc. (NASDAQ:MKGI), Superior Industries International Inc. (NYSE:SUP), Opiant Pharmaceuticals, Inc. (NASDAQ:OPNT), Unico American Corporation (NASDAQ:UNAM), and CPI Aerostructures, Inc. (NYSE:CVU). This group of stocks’ market valuations are closest to AEHR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LIFE | 6 | 6329 | 1 |
| AMPY | 12 | 12882 | -6 |
| MKGI | 2 | 854 | 1 |
| SUP | 12 | 5105 | -1 |
| OPNT | 3 | 2650 | -1 |
| UNAM | 1 | 136 | 0 |
| CVU | 2 | 2612 | -2 |
| Average | 5.4 | 4367 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $2 million in AEHR’s case. Amplify Energy Corp. (NYSE:AMPY) is the most popular stock in this table. On the other hand Unico American Corporation (NASDAQ:UNAM) is the least popular one with only 1 bullish hedge fund positions. Aehr Test Systems (NASDAQ:AEHR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AEHR is 30.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on AEHR as the stock returned 23% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
