Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Silicom Ltd. (NASDAQ:SILC).
Is Silicom Ltd. (NASDAQ:SILC) worth your attention right now? Investors who are in the know are in a bullish mood. The number of long hedge fund positions advanced by 1 in recent months. Our calculations also showed that SILC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). SILC was in 6 hedge funds’ portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with SILC positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are dozens of tools investors can use to value publicly traded companies. A pair of the most innovative tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best money managers can beat the market by a healthy amount (see the details here).
David E. Shaw of D.E. Shaw
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. With all of this in mind we’re going to view the key hedge fund action surrounding Silicom Ltd. (NASDAQ:SILC).
What have hedge funds been doing with Silicom Ltd. (NASDAQ:SILC)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SILC over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AWH Capital was the largest shareholder of Silicom Ltd. (NASDAQ:SILC), with a stake worth $4.4 million reported as of the end of September. Trailing AWH Capital was Intrepid Capital Management, which amassed a stake valued at $3.5 million. D E Shaw, Renaissance Technologies, and Millennium Management 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 AWH Capital allocated the biggest weight to Silicom Ltd. (NASDAQ:SILC), around 5.55% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, setting aside 1.84 percent of its 13F equity portfolio to SILC.
Consequently, key money managers were breaking ground themselves. Renaissance Technologies, established the most valuable position in Silicom Ltd. (NASDAQ:SILC). Renaissance Technologies had $0.8 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Silicom Ltd. (NASDAQ:SILC) but similarly valued. We will take a look at iRadimed Corporation (NASDAQ:IRMD), La Jolla Pharmaceutical Company (NASDAQ:LJPC), Farmland Partners Inc (NYSE:FPI), and Investar Holding Corporation (NASDAQ:ISTR). All of these stocks’ market caps resemble SILC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IRMD | 9 | 14661 | 3 |
| LJPC | 13 | 79706 | 0 |
| FPI | 9 | 6350 | 1 |
| ISTR | 6 | 27207 | 1 |
| Average | 9.25 | 31981 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $11 million in SILC’s case. La Jolla Pharmaceutical Company (NASDAQ:LJPC) is the most popular stock in this table. On the other hand Investar Holding Corporation (NASDAQ:ISTR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Silicom Ltd. (NASDAQ:SILC) is even less popular than ISTR. Hedge funds dodged a bullet by taking a bearish stance towards SILC. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SILC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SILC investors were disappointed as the stock returned 3.9% during the fourth quarter (through the end of November) 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 so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
