Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim to deliver attractive risk-adjusted returns rather than follow the ups-and-downs of equity markets. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Fabrinet (NYSE:FN).
Is Fabrinet a healthy stock for your portfolio? Investors who are in the know are getting more bullish. The number of bullish hedge fund positions rose by 7 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as WL Ross Holding Corp (NASDAQ:WLRH), Array Biopharma Inc (NASDAQ:ARRY), and William Lyon Homes (NYSE:WLH) to gather more data points.
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Follow Fabrinet (NYSE:FN)
In today’s marketplace there are plenty of indicators investors put to use to assess stocks. A duo of the best indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top money managers can beat the S&P 500 by a superb margin (see the details here).
Now, we’re going to take a gander at the new action encompassing Fabrinet (NYSE:FN).
Hedge fund activity in Fabrinet (NYSE:FN)
Heading into Q4, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 54% jump from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Fabrinet (NYSE:FN), worth close to $55.7 million, corresponding to 0.3% of its total 13F portfolio. Sitting in the 2 spot is Ken Hahn’s Quentec Asset Management, with a $14.1 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions consist of Paul Marshall and Ian Wace’s Marshall Wace LLP, Israel Englander’s Millennium Management, and Mark Travis’ Intrepid Capital Management.
As one would reasonably expect, some big names have jumped into Fabrinet (NYSE:FN) headfirst. Marshall Wace LLP created the most valuable position in Fabrinet (NYSE:FN). Marshall Wace LLP had $9.5 million invested in the company at the end of the quarter. Leon Cooperman’s Omega Advisors also made a $2.3 million investment in the stock during the quarter. The following funds were also among the new FN investors: George Soros’ family office Soros Fund Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Fabrinet (NYSE:FN) but similarly valued. We will take a look at WL Ross Holding Corp (NASDAQ:WLRH), Array Biopharma Inc (NASDAQ:ARRY), William Lyon Homes (NYSE:WLH), and Washington Trust Bancorp (NASDAQ:WASH). This group of stocks’ market valuations are similar to FN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLRH | 13 | 141759 | 2 |
| ARRY | 22 | 266197 | 1 |
| WLH | 21 | 309697 | 7 |
| WASH | 5 | 15590 | 3 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $115 million in FN’s case. Array Biopharma Inc (NASDAQ:ARRY) is the most popular stock in this table. On the other hand Washington Trust Bancorp (NASDAQ:WASH) is the least popular one with only 5 bullish hedge fund positions. Fabrinet (NYSE:FN) is not the most popular stock in this group but hedge fund interest is still above average and rising. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are also pumping a lot of money into. In this regard ARRY and WLH might be better candidates to consider long positions in.
