Is O2Micro International Limited (OIIM) A Good Stock To Buy?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was O2Micro International Limited (NASDAQ:OIIM).

Is OIIM a good stock to buy? Hedge fund interest in O2Micro International Limited (NASDAQ:OIIM) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that OIIM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare OIIM to other stocks including SGOCO Group Ltd (NASDAQ:SGOC), Western New England Bancorp, Inc. (NASDAQ:WNEB), and Capital Product Partners L.P. (NASDAQ:CPLP) to get a better sense of its popularity.

If you’d ask most stock holders, hedge funds are seen as unimportant, old investment vehicles of years past. While there are over 8000 funds with their doors open at the moment, Our researchers look at the upper echelon of this group, about 850 funds. Most estimates calculate that this group of people have their hands on the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their top investments, Insider Monkey has found several investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Louis Navellier of Navellier & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Now let’s review the new hedge fund action surrounding O2Micro International Limited (NASDAQ:OIIM).

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

Heading into the second quarter of 2021, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. By comparison, 2 hedge funds held shares or bullish call options in OIIM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in O2Micro International Limited (NASDAQ:OIIM) was held by AIGH Investment Partners, which reported holding $14.3 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $14.1 million position. Other investors bullish on the company included Millennium Management, Navellier & Associates, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position AIGH Investment Partners allocated the biggest weight to O2Micro International Limited (NASDAQ:OIIM), around 3.01% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to OIIM.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace LLP. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Two Sigma Advisors).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as O2Micro International Limited (NASDAQ:OIIM) but similarly valued. These stocks are SGOCO Group Ltd (NASDAQ:SGOC), Western New England Bancorp, Inc. (NASDAQ:WNEB), Capital Product Partners L.P. (NASDAQ:CPLP), Weyco Group, Inc. (NASDAQ:WEYS), Hycroft Mining Holding Corporation (NASDAQ:HYMC), Wrap Technologies, Inc. (NASDAQ:WRAP), and International Tower Hill Mines Ltd (NYSE:THM). This group of stocks’ market caps resemble OIIM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $29 million in OIIM’s case. Hycroft Mining Holding Corporation (NASDAQ:HYMC) is the most popular stock in this table. On the other hand Weyco Group, Inc. (NASDAQ:WEYS) is the least popular one with only 2 bullish hedge fund positions. O2Micro International Limited (NASDAQ:OIIM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OIIM is 44.4. 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 negative signal and 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately OIIM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); OIIM investors were disappointed as the stock returned -11.9% since the end of March (through 6/18) 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 most of these stocks already outperformed the market in 2021.

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