Is Vishay Intertechnology (VSH) a Good Stock To Buy?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

One stock that saw an increase in popularity in the third quarter is Vishay Intertechnology (NYSE:VSH). Between July and September, the number of funds tracked by Insider Monkey long the stock went up by three to 17. 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 Intersil Corp (NASDAQ:ISIL), Penumbra Inc (NYSE:PEN), and Office Depot Inc (NYSE:ODP) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Dragon Images/Shutterstock.com

Keeping this in mind, we’re going to take a peek at the latest action encompassing Vishay Intertechnology (NYSE:VSH).

How have hedgies been trading Vishay Intertechnology (NYSE:VSH)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in Vishay Intertechnology (NYSE:VSH), which represents an increase of 21% from the end of the second quarter. By comparison, 17 hedge funds held shares or bullish call options in VSH heading into 2016. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the most valuable position in Vishay Intertechnology (NYSE:VSH). Royce & Associates has a $101.7 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Ken Fisher’s Fisher Asset Management, which reported a $70.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism encompass Cliff Asness’ AQR Capital Management, Howard Marks’s Oaktree Capital Management and Ernest Chow and Jonathan Howe’s Sensato Capital Management. We should note that Sensato Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, some big names have jumped into Vishay Intertechnology (NYSE:VSH) headfirst. Marshall Wace LLP, led by Paul Marshall and Ian Wace, created the most valuable position in Vishay Intertechnology (NYSE:VSH). Marshall Wace LLP had $0.4 million invested in the company at the end of the quarter. Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Vishay Intertechnology (NYSE:VSH) but similarly valued. We will take a look at Intersil Corp (NASDAQ:ISIL), Penumbra Inc (NYSE:PEN), Office Depot Inc (NYSE:ODP), and Esterline Technologies Corporation (NYSE:ESL). This group of stocks’ market caps are similar to VSH’s market cap.

As you can see these stocks had an average of 25 investors with bullish positions and the average amount invested in these stocks was $285 million. That figure was $272 million in VSH’s case. Office Depot Inc (NYSE:ODP) is the most popular stock in this table, while Penumbra Inc (NYSE:PEN) is the least popular one with only 17 investors holding shares. Compared to these stocks Vishay Intertechnology (NYSE:VSH) is even less popular than Penumbra Inc (NYSE:PEN). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.