Is Ichor Holdings Ltd. (ICHR) Going to Burn These Hedge Funds?

In this article we will analyze whether Ichor Holdings Ltd. (NASDAQ:ICHR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Ichor Holdings Ltd. (NASDAQ:ICHR) investors should be aware of an increase in enthusiasm from smart money of late. Ichor Holdings Ltd. (NASDAQ:ICHR) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that ICHR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most stock holders, hedge funds are assumed to be unimportant, old financial tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts look at the elite of this group, about 850 funds. These hedge fund managers orchestrate the majority of the smart money’s total asset base, and by following their finest picks, Insider Monkey has come up with numerous investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Steven Cohen of Point72 Asset Managemen

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to view the key hedge fund action regarding Ichor Holdings Ltd. (NASDAQ:ICHR).

Do Hedge Funds Think ICHR Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ICHR over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Among these funds, Royce & Associates held the most valuable stake in Ichor Holdings Ltd. (NASDAQ:ICHR), which was worth $26.4 million at the end of the second quarter. On the second spot was Point72 Asset Management which amassed $25.1 million worth of shares. Two Sigma Advisors, Renaissance Technologies, and Citadel Investment Group 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 Glaxis Capital Management allocated the biggest weight to Ichor Holdings Ltd. (NASDAQ:ICHR), around 2.75% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, setting aside 0.38 percent of its 13F equity portfolio to ICHR.

Consequently, specific money managers have been driving this bullishness. ZWEIG DIMENNA PARTNERS, managed by Joe DiMenna, assembled the biggest position in Ichor Holdings Ltd. (NASDAQ:ICHR). ZWEIG DIMENNA PARTNERS had $4.9 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new ICHR investors: Michael Gelband’s ExodusPoint Capital, Mika Toikka’s AlphaCrest Capital Management, and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks similar to Ichor Holdings Ltd. (NASDAQ:ICHR). These stocks are Krystal Biotech, Inc. (NASDAQ:KRYS), AMTD International Inc. (NYSE:HKIB), PLBY Group, Inc. (NASDAQ:PLBY), U.S. Physical Therapy, Inc. (NYSE:USPH), Alphatec Holdings Inc (NASDAQ:ATEC), Bonanza Creek Energy Inc (NYSE:BCEI), and Noble Corporation (NYSE:NE). This group of stocks’ market valuations match ICHR’s market valuation.

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As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $89 million in ICHR’s case. Bonanza Creek Energy Inc (NYSE:BCEI) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 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. Our overall hedge fund sentiment score for ICHR is 82.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately ICHR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ICHR were disappointed as the stock returned -28.9% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.