Smart Money Retains Its Bullishness For Hollysys Automation Technologies Ltd (HOLI)

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the latest smart money sentiment towards Hollysys Automation Technologies Ltd (NASDAQ:HOLI).

Hollysys Automation Technologies Ltd (NASDAQ:HOLI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged, with the stock still being held in 22 hedge funds’ portfolios at the end of September. At the end of this article we will also compare Hollysys Automation Technologies Ltd to other stocks including Maiden Holdings, Ltd. (NASDAQ:MHLD), Analogic Corporation (NASDAQ:ALOG), and Spark Therapeutics Inc (NASDAQ:ONCE) to get a better sense of its popularity.

If you’d ask most traders, hedge funds are seen as underperforming, outdated investment tools of years past. While there are more than 8,000 funds with their doors open at present, our experts choose to focus on the moguls of this club, approximately 700 funds. It is estimated that this group of investors preside over the majority of all hedge funds’ total asset base, and by tailing their first-class equity investments, Insider Monkey has discovered numerous investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, let’s review the new action encompassing Hollysys Automation Technologies Ltd (NASDAQ:HOLI).

What have hedge funds been doing with Hollysys Automation Technologies Ltd (NASDAQ:HOLI)?

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or had already accumulated large positions).

According to Insider Monkey’s hedge fund database, Sloane Robinson Investment Management, managed by Hugh Sloane, holds the biggest position in Hollysys Automation Technologies Ltd (NASDAQ:HOLI). Sloane Robinson Investment Management has a $33.4 million position in the stock, comprising 37.4% of its 13F portfolio. On Sloane Robinson Investment Management’s heels is Impax Asset Management, managed by Ian Simm, which holds a $9.2 million position; 0.6% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Chuck Royce’s Royce & Associates, Patrik Brummer’s Zenit Asset Management AB, and Renaissance Technologies.

Because Hollysys Automation Technologies Ltd (NASDAQ:HOLI) has witnessed a declination in interest from hedge fund managers, we can see that there is a sect of fund managers that elected to cut their full holdings in the third quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest stake of the 700 funds followed by Insider Monkey, comprising about $1.4 million in stock, and Fang Zheng’s Keywise Capital Management was right behind this move, as the fund cut about $1.4 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Hollysys Automation Technologies Ltd (NASDAQ:HOLI) but similarly valued. We will take a look at Maiden Holdings, Ltd. (NASDAQ:MHLD), Analogic Corporation (NASDAQ:ALOG), Spark Therapeutics Inc (NASDAQ:ONCE), and Globant SA (NYSE:GLOB). This group of stocks’ market valuations are closest to Hollysys Automation Technologies Ltd’s market valuation.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $83 million in Hollysys Automation Technologies Ltd’s case. Maiden Holdings, Ltd. (NASDAQ:MHLD) is the most popular stock in this table. On the other hand Globant SA (NYSE:GLOB) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Hollysys Automation Technologies Ltd (NASDAQ:HOLI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.