Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Cray Inc. (NASDAQ:CRAY).
Is Cray Inc. (NASDAQ:CRAY) a good investment today? Prominent investors are buying. The number of bullish hedge fund bets went up by 4 in recent months. At the end of this article we will also compare CRAY to other stocks, including Tutor Perini Corp (NYSE:TPC), EarthLink, Inc. (NASDAQ:ELNK), and Aceto Corporation (NASDAQ:ACET) to get a better sense of its popularity.
Follow Cray Inc (NASDAQ:CRAY)
Follow Cray Inc (NASDAQ:CRAY)
In the eyes of most traders, hedge funds are perceived as slow, old financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, Our experts look at the elite of this club, about 700 funds. Most estimates calculate that this group of people preside over the majority of all hedge funds’ total capital, and by monitoring their unrivaled investments, Insider Monkey has unearthed many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s take a gander at the latest action regarding Cray Inc. (NASDAQ:CRAY).
Hedge fund activity in Cray Inc. (NASDAQ:CRAY)
At the Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 50% from the previous quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Levin Capital Strategies, managed by John A. Levin, holds the biggest position in Cray Inc. (NASDAQ:CRAY). Levin Capital Strategies has an $15.9 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which holds an $13.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism contain D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Glenn Russell Dubin’s Highbridge Capital Management.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, established the biggest call position in Cray Inc. (NASDAQ:CRAY). Highbridge Capital Management had $1.1 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated an $0.9 million position during the quarter. The following funds were also among the new CRAY investors: Israel Englander’s Millennium Management, Paul Tudor Jones’s Tudor Investment Corp, and David Costen Haley’s HBK Investments.
Let’s check out hedge fund activity in other stocks similar to Cray Inc. (NASDAQ:CRAY). We will take a look at Tutor Perini Corp (NYSE:TPC), EarthLink, Inc. (NASDAQ:ELNK), Aceto Corporation (NASDAQ:ACET), and Hanmi Financial Corp (NASDAQ:HAFC). This group of stocks’ market caps are closest to CRAY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TPC | 16 | 51865 | -3 |
| ELNK | 23 | 141218 | 2 |
| ACET | 11 | 48423 | 6 |
| HAFC | 13 | 72344 | 3 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $78 million, compared to $39 million in CRAY’s case. EarthLink, Inc. (NASDAQ:ELNK) is the most popular stock in this table. On the other hand Aceto Corporation (NASDAQ:ACET) is the least popular one with only 11 bullish hedge fund positions. Cray Inc. (NASDAQ:CRAY) 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. In this regard ELNK might be a better candidate to consider a long position.
