How do we determine whether Akoustis Technologies, Inc. (NASDAQ:AKTS) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Akoustis Technologies, Inc. (NASDAQ:AKTS) investors should pay attention to an increase in hedge fund interest lately. AKTS was in 6 hedge funds’ portfolios at the end of the third quarter of 2019. There were 4 hedge funds in our database with AKTS holdings at the end of the previous quarter. Our calculations also showed that AKTS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
William Graves of Boardman Bay Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a look at the latest hedge fund action encompassing Akoustis Technologies, Inc. (NASDAQ:AKTS).
How are hedge funds trading Akoustis Technologies, Inc. (NASDAQ:AKTS)?
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the second quarter of 2019. By comparison, 4 hedge funds held shares or bullish call options in AKTS a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, North Run Capital held the most valuable stake in Akoustis Technologies, Inc. (NASDAQ:AKTS), which was worth $2.9 million at the end of the third quarter. On the second spot was Boardman Bay Capital Management which amassed $1.1 million worth of shares. Citadel Investment Group, Millennium Management, and Trellus Management Company 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 North Run Capital allocated the biggest weight to Akoustis Technologies, Inc. (NASDAQ:AKTS), around 2.18% of its 13F portfolio. Boardman Bay Capital Management is also relatively very bullish on the stock, dishing out 1.16 percent of its 13F equity portfolio to AKTS.
As one would reasonably expect, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the biggest position in Akoustis Technologies, Inc. (NASDAQ:AKTS). Millennium Management had $0.2 million invested in the company at the end of the quarter. Adam Usdan’s Trellus Management Company also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new AKTS investors: Ken Griffin’s Citadel Investment Group and Minhua Zhang’s Weld Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Akoustis Technologies, Inc. (NASDAQ:AKTS) but similarly valued. These stocks are SeaSpine Holdings Corp (NASDAQ:SPNE), Marker Therapeutics, Inc. (NASDAQ:MRKR), Iteris Inc (NASDAQ:ITI), and ASA Gold and Precious Metals Ltd (NYSE:ASA). This group of stocks’ market valuations match AKTS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPNE | 7 | 14269 | 0 |
| MRKR | 9 | 20168 | 0 |
| ITI | 12 | 27224 | -3 |
| ASA | 3 | 14873 | 0 |
| Average | 7.75 | 19134 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $5 million in AKTS’s case. Iteris Inc (NASDAQ:ITI) is the most popular stock in this table. On the other hand ASA Gold and Precious Metals Ltd (NYSE:ASA) is the least popular one with only 3 bullish hedge fund positions. Akoustis Technologies, Inc. (NASDAQ:AKTS) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AKTS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AKTS investors were disappointed as the stock returned -1.5% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.