Do Hedge Funds Love FormFactor, Inc. (FORM)?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding FormFactor, Inc. (NASDAQ:FORM).

FormFactor, Inc. (NASDAQ:FORM) investors should be aware of an increase in activity from the world’s largest hedge funds of late. FormFactor, Inc. (NASDAQ:FORM) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that FORM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you’d ask most stock holders, hedge funds are viewed as unimportant, outdated financial tools of the past. While there are greater than 8000 funds trading at the moment, Our researchers look at the masters of this club, approximately 850 funds. It is estimated that this group of investors shepherd the lion’s share of the smart money’s total capital, and by paying attention to their finest investments, Insider Monkey has spotted many investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. 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. Now let’s analyze the key hedge fund action encompassing FormFactor, Inc. (NASDAQ:FORM).

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

At second quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in FORM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in FormFactor, Inc. (NASDAQ:FORM). Royce & Associates has a $51.5 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Select Equity Group, led by Robert Joseph Caruso, holding a $35.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Renaissance Technologies. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to FormFactor, Inc. (NASDAQ:FORM), around 0.35% of its 13F portfolio. Cinctive Capital Management is also relatively very bullish on the stock, setting aside 0.12 percent of its 13F equity portfolio to FORM.

Consequently, specific money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, established the largest position in FormFactor, Inc. (NASDAQ:FORM). D E Shaw had $8.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $3.5 million position during the quarter. The other funds with brand new FORM positions are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Michael Gelband’s ExodusPoint Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks similar to FormFactor, Inc. (NASDAQ:FORM). These stocks are GrowGeneration Corp. (NASDAQ:GRWG), Arcosa, Inc. (NYSE:ACA), Brinker International, Inc. (NYSE:EAT), California Water Service Group (NYSE:CWT), Atai Life Sciences N.V. (NASDAQ:ATAI), Cimpress plc (NASDAQ:CMPR), and The Cheesecake Factory Incorporated (NASDAQ:CAKE). All of these stocks’ market caps match FORM’s market cap.

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As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $167 million in FORM’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand California Water Service Group (NYSE:CWT) is the least popular one with only 9 bullish hedge fund positions. FormFactor, Inc. (NASDAQ:FORM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FORM is 59.1. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately FORM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FORM were disappointed as the stock returned 1.9% since the end of June (through 10/22) 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.

Suggested Articles:

• 13 Stocks that Best Performing Hedge Funds are Piling Into
• 10 Best Stocks Under $10 to Buy Right Now
• 10 Biggest Hedge Fund Failures

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