As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the third quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Ferro Corporation (NYSE:FOE).
Ferro Corporation (NYSE:FOE) was in 16 hedge funds’ portfolios at the end of September. FOE has seen an increase in activity from the world’s largest hedge funds of late. There were 14 hedge funds in our database with FOE holdings at the end of the previous quarter. Our calculations also showed that FOE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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.
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. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing Ferro Corporation (NYSE:FOE).
How are hedge funds trading Ferro Corporation (NYSE:FOE)?
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FOE over the last 17 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Ferro Corporation (NYSE:FOE), with a stake worth $48.8 million reported as of the end of September. Trailing GAMCO Investors was Luminus Management, which amassed a stake valued at $30.9 million. Arrowstreet Capital, Brigade Capital, and Royce & Associates 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 Cruiser Capital Advisors allocated the biggest weight to Ferro Corporation (NYSE:FOE), around 1.41% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, earmarking 0.89 percent of its 13F equity portfolio to FOE.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Ancora Advisors, managed by Frederick DiSanto, created the biggest position in Ferro Corporation (NYSE:FOE). Ancora Advisors had $6.7 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $5.1 million investment in the stock during the quarter. The other funds with brand new FOE positions are Ira Unschuld’s Brant Point Investment Management and Ira Unschuld’s Brant Point Investment Management.
Let’s now review hedge fund activity in other stocks similar to Ferro Corporation (NYSE:FOE). We will take a look at Mr. Cooper Group Inc. (NASDAQ:COOP), ACCO Brands Corporation (NYSE:ACCO), HeadHunter Group PLC (NASDAQ:HHR), and iHeartMedia, Inc. (NASDAQ:IHRT). This group of stocks’ market caps are similar to FOE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COOP | 24 | 285179 | 1 |
| ACCO | 19 | 54847 | 3 |
| HHR | 8 | 73959 | -4 |
| IHRT | 26 | 178664 | 26 |
| Average | 19.25 | 148162 | 6.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $131 million in FOE’s case. iHeartMedia, Inc. (NASDAQ:IHRT) is the most popular stock in this table. On the other hand HeadHunter Group PLC (NASDAQ:HHR) is the least popular one with only 8 bullish hedge fund positions. Ferro Corporation (NYSE:FOE) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on FOE as the stock returned 21.6% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
