A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on GSI Technology, Inc. (NASDAQ:GSIT).
Is GSI Technology, Inc. (NASDAQ:GSIT) a good stock to buy now? The smart money is buying. The number of long hedge fund positions rose by 2 lately. Our calculations also showed that GSIT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). GSIT was in 6 hedge funds’ portfolios at the end of September. There were 4 hedge funds in our database with GSIT 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
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. Now let’s take a gander at the recent hedge fund action surrounding GSI Technology, Inc. (NASDAQ:GSIT).
Hedge fund activity in GSI Technology, Inc. (NASDAQ:GSIT)
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in GSIT a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of GSI Technology, Inc. (NASDAQ:GSIT), with a stake worth $8 million reported as of the end of September. Trailing Renaissance Technologies was Ariel Investments, which amassed a stake valued at $5 million. Roumell Asset Management, Marshall Wace, and Winton Capital 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 Roumell Asset Management allocated the biggest weight to GSI Technology, Inc. (NASDAQ:GSIT), around 9.22% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.07 percent of its 13F equity portfolio to GSIT.
As industrywide interest jumped, specific money managers were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the biggest position in GSI Technology, Inc. (NASDAQ:GSIT). Marshall Wace had $0.4 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $0.3 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as GSI Technology, Inc. (NASDAQ:GSIT) but similarly valued. These stocks are Arlington Asset Investment Corp (NYSE:AI), Senseonics Holdings, Inc. (NYSE:SENS), RedHill Biopharma Ltd. (NASDAQ:RDHL), and Gold Resource Corporation (NYSE:GORO). This group of stocks’ market caps resemble GSIT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AI | 7 | 20208 | 0 |
| SENS | 9 | 6292 | 0 |
| RDHL | 2 | 24590 | 0 |
| GORO | 6 | 5835 | -2 |
| Average | 6 | 14231 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $18 million in GSIT’s case. Senseonics Holdings, Inc. (NYSE:SENS) is the most popular stock in this table. On the other hand RedHill Biopharma Ltd. (NASDAQ:RDHL) is the least popular one with only 2 bullish hedge fund positions. GSI Technology, Inc. (NASDAQ:GSIT) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GSIT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GSIT investors were disappointed as the stock returned -16.4% during the first two months of the fourth quarter 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
