In this article we are going to use hedge fund sentiment as a tool and determine whether Intevac, Inc. (NASDAQ:IVAC) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Intevac (IVAC) a good stock to buy now? IVAC shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. Our calculations also showed that IVAC 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Alithya Group inc. (NASDAQ:ALYA), Auburn National Bancorporation, Inc. (NASDAQ:AUBN), and First Savings Financial Group, Inc. (NASDAQ:FSFG) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
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 15 best blue chip stocks 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. Now we’re going to take a glance at the key hedge fund action surrounding Intevac, Inc. (NASDAQ:IVAC).
What does smart money think about Intevac, Inc. (NASDAQ:IVAC)?
At third quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards IVAC over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Intevac, Inc. (NASDAQ:IVAC) was held by Royce & Associates, which reported holding $10.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $2.8 million position. Other investors bullish on the company included Ancora Advisors, Becker Drapkin Management, and Winton Capital Management. In terms of the portfolio weights assigned to each position Becker Drapkin Management allocated the biggest weight to Intevac, Inc. (NASDAQ:IVAC), around 0.4% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.11 percent of its 13F equity portfolio to IVAC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks similar to Intevac, Inc. (NASDAQ:IVAC). We will take a look at Alithya Group inc. (NASDAQ:ALYA), Auburn National Bancorporation, Inc. (NASDAQ:AUBN), First Savings Financial Group, Inc. (NASDAQ:FSFG), SharpSpring, Inc. (NASDAQ:SHSP), Airgain, Inc. (NASDAQ:AIRG), Zovio Inc. (NASDAQ:ZVO), and AgroFresh Solutions Inc (NASDAQ:AGFS). This group of stocks’ market valuations match IVAC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALYA | 4 | 8460 | 0 |
| AUBN | 1 | 234 | 0 |
| FSFG | 3 | 4412 | 0 |
| SHSP | 7 | 32391 | -3 |
| AIRG | 8 | 11258 | -2 |
| ZVO | 10 | 32482 | 2 |
| AGFS | 3 | 1438 | -1 |
| Average | 5.1 | 12954 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $15 million in IVAC’s case. Zovio Inc. (NASDAQ:ZVO) is the most popular stock in this table. On the other hand Auburn National Bancorporation, Inc. (NASDAQ:AUBN) is the least popular one with only 1 bullish hedge fund positions. Intevac, Inc. (NASDAQ:IVAC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IVAC is 44. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on IVAC, though not to the same extent, as the stock returned 9.4% since Q3 (through November 27th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
