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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Ichor Holdings, Ltd. (NASDAQ:ICHR) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Ichor Holdings, Ltd. (NASDAQ:ICHR) undervalued? Money managers are getting more optimistic. The number of bullish hedge fund positions moved up by 2 lately. Our calculations also showed that ichr isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
Let’s take a look at the recent hedge fund action encompassing Ichor Holdings, Ltd. (NASDAQ:ICHR).
What does the smart money think about Ichor Holdings, Ltd. (NASDAQ:ICHR)?
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in ICHR at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the number one position in Ichor Holdings, Ltd. (NASDAQ:ICHR). Impax Asset Management has a $15.3 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, led by Chuck Royce, holding a $11.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain Steve Cohen’s Point72 Asset Management, Cliff Asness’s AQR Capital Management and Paul Hondros’s AlphaOne Capital Partners.
Consequently, specific money managers have jumped into Ichor Holdings, Ltd. (NASDAQ:ICHR) headfirst. Gotham Asset Management, managed by Joel Greenblatt, assembled the most outsized position in Ichor Holdings, Ltd. (NASDAQ:ICHR). Gotham Asset Management had $1.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.3 million position during the quarter. The other funds with brand new ICHR positions are Mike Vranos’s Ellington, Matthew Hulsizer’s PEAK6 Capital Management, and Jeffrey Talpins’s Element Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ichor Holdings, Ltd. (NASDAQ:ICHR) but similarly valued. These stocks are Calyxt, Inc. (NASDAQ:CLXT), Calumet Specialty Products Partners, L.P (NASDAQ:CLMT), Model N Inc (NYSE:MODN), and Spirit MTA REIT (NYSE:SMTA). This group of stocks’ market caps match ICHR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLXT | 3 | 11603 | -2 |
| CLMT | 4 | 13187 | -1 |
| MODN | 14 | 66441 | -3 |
| SMTA | 22 | 162442 | 0 |
| Average | 10.75 | 63418 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $53 million in ICHR’s case. Spirit MTA REIT (NYSE:SMTA) is the most popular stock in this table. On the other hand Calyxt, Inc. (NASDAQ:CLXT) is the least popular one with only 3 bullish hedge fund positions. Ichor Holdings, Ltd. (NASDAQ:ICHR) 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 SMTA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
