Was Quentec Asset Management Right to Bet on Micron Technology, Inc. (MU), Fabrinet (FN), & Others

Quentec Asset Management LLC is a New York-based investment firm run by Ken Hahn. Quentec’s portfolio was valued at $804.84 million at the end of the second quarter. The firm invests in technology, utilities and telecommunication. Quentec returned 18.01% in the third quarter from its 23 long positions in companies having a market capitalization of $1 billion or more, according to our calculations.

Our research shows that non-microcap stock picks of hedge funds are worthwhile to watch, as compared to their short side of holdings. In the third quarter, 659 hedge funds in our database that had at least 5 non-microcap stocks in their 13F portfolio posted an average return of 8.3%, versus the S&P 500 ETFs return of 3.3%. Hedge funds on average are underperforming the market, resulting in investor exodus and disapointment, but tacking long portfolios of large-cap stocks is worth the investment and attention.

Quentec Asset Management also managed to post impressive returns by going long in large-cap companies. So let’s take a closer look at some of the fund’s top picks.

Quentec Asset Management boosted its stake in Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) by 52% in the second quarter, having reported 2.66 million shares valued at $22.01 million in its last 13F filing. The stock inched up by 5.5% during the third quarter. At the end of June, 24 funds tracked by Insider Monkey were bullish on this stock, down by 11% from the previous quarter. More specifically, Prince Street Capital Management, managed by David Halpert, held the number one position in Himax Technologies, Inc. (ADR) (NASDAQ:HIMX). Prince Street Capital Management had a $24.8 million position in the stock. Other peers that were bullish consisted of Bruce Garelick’s Garelick Capital Partners, Israel Englander’s Millennium Management, and Spencer M. Waxman’s Shannon River Fund Management.

Quentec Asset Management unloaded 27% of its position in Fabrinet (NYSE:FN) during the second quarter, having ended the period with 575,979 shares worth $21.38 million. The stock gained 20.1% during the third quarter. A total of 18 followed by our team held shares of Fabrinet, down by 5% over the quarter. When looking at the institutional investors followed by Insider Monkey, Whale Rock Capital Management, managed by Alex Sacerdote, held the biggest position in Fabrinet (NYSE:FN), which was worth $51 million. Sitting at the No. 2 spot was Royce & Associates, led by Chuck Royce, holding a $21.4 million position. Some other members of the smart money with similar optimism encompass Richard Driehaus’s Driehaus Capital and D. E. Shaw’s D E Shaw.

Quentec Asset Management acquired 822,519 shares of Lumentum Holdings Inc (NASDAQ:LITE) in the June quarter and held a $21.31 million stake containing 880,525 shares at the end of June. The investment paid off, as the stock surged by 72.6% during the third quarter. The number of funds tracked by us long Lumentum declined by eight to 25 during the second quarter. Among these funds, Marshall Wace LLP, managed by Paul Marshall and Ian Wace, amassed the most valuable position in Lumentum Holdings Inc (NASDAQ:LITE), having disclosed a $25.1 million stake as of the end of June. Some other hedge funds and institutional investors that held long positions encompassed John Overdeck and David Siegel’s Two Sigma Advisors, George McCabe’s Portolan Capital Management and Mark Kingdon’s Kingdon Capital.

Quentec Asset Management upped its stake in Micron Technology, Inc. (NASDAQ:MU) by 110% to 1.35 million shares during the second quarter; the value of the stake amounted to $18.57 million. In the following three months, Quentec saw the stock appreciate by 29.2%. Including Quentec, 67 funds from our database held shares of Micron at the end of June, up by 31% over the quarter. Arrowstreet Capital was the largest shareholder of Micron Technology, Inc. (NASDAQ:MU), with a stake worth $107.7 million reported as of the end of June. Trailing Arrowstreet Capital was Stelliam Investment Management, which amassed a stake valued at $93.5 million. Orbis Investment Management, D. E. Shaw, and Columbus Circle Investors also held valuable positions in the company.

Disclosure: none