Were Hedge Funds Right About Himax Technologies, Inc. (HIMX)?

·6 min read

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Himax Technologies, Inc. (NASDAQ:HIMX)?

Himax Technologies, Inc. (NASDAQ:HIMX) was in 18 hedge funds' portfolios at the end of March. The all time high for this statistic is 27. HIMX has experienced an increase in hedge fund sentiment lately. There were 12 hedge funds in our database with HIMX holdings at the end of December. Our calculations also showed that HIMX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Noam Gottesman GLG Partners
Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let's review the new hedge fund action encompassing Himax Technologies, Inc. (NASDAQ:HIMX).

Do Hedge Funds Think HIMX Is A Good Stock To Buy Now?

At first quarter's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in HIMX over the last 23 quarters. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Is HIMX A Good Stock To Buy?
Is HIMX A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Yiheng Capital, managed by Jonathan Guo, holds the most valuable position in Himax Technologies, Inc. (NASDAQ:HIMX). Yiheng Capital has a $111.8 million position in the stock, comprising 5.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $47.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Israel Englander's Millennium Management, John Overdeck and David Siegel's Two Sigma Advisors and Douglas Harold Hart Polunin's Polunin Capital. In terms of the portfolio weights assigned to each position Polunin Capital allocated the biggest weight to Himax Technologies, Inc. (NASDAQ:HIMX), around 6.08% of its 13F portfolio. Yiheng Capital is also relatively very bullish on the stock, earmarking 5.07 percent of its 13F equity portfolio to HIMX.

Now, specific money managers have been driving this bullishness. Portolan Capital Management, managed by George McCabe, established the biggest position in Himax Technologies, Inc. (NASDAQ:HIMX). Portolan Capital Management had $3 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $0.9 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman's GLG Partners, Paul Tudor Jones's Tudor Investment Corp, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.

Let's check out hedge fund activity in other stocks similar to Himax Technologies, Inc. (NASDAQ:HIMX). We will take a look at Helios Technologies, Inc. (NASDAQ:HLIO), Niu Technologies (NASDAQ:NIU), First Financial Bancorp (NASDAQ:FFBC), Washington Federal Inc. (NASDAQ:WAFD), Organogenesis Holdings Inc. (NASDAQ:ORGO), Rubius Therapeutics, Inc. (NASDAQ:RUBY), and Outset Medical, Inc. (NASDAQ:OM). This group of stocks' market caps are similar to HIMX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HLIO,7,69637,1 NIU,14,192653,3 FFBC,11,25788,-3 WAFD,18,123411,4 ORGO,12,119015,2 RUBY,11,29025,2 OM,17,611460,-7 Average,12.9,167284,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $232 million in HIMX's case. Washington Federal Inc. (NASDAQ:WAFD) is the most popular stock in this table. On the other hand Helios Technologies, Inc. (NASDAQ:HLIO) is the least popular one with only 7 bullish hedge fund positions. Himax Technologies, Inc. (NASDAQ:HIMX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HIMX is 80. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately HIMX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on HIMX were disappointed as the stock returned -1.5% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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