Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Fluidigm Corporation (NASDAQ:FLDM) changed recently.
Fluidigm Corporation (NASDAQ:FLDM) was in 17 hedge funds’ portfolios at the end of June. FLDM shareholders have witnessed a decrease in hedge fund sentiment of late. There were 19 hedge funds in our database with FLDM holdings at the end of the previous quarter. Our calculations also showed that FLDM isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the key hedge fund action regarding Fluidigm Corporation (NASDAQ:FLDM).
What have hedge funds been doing with Fluidigm Corporation (NASDAQ:FLDM)?
At the end of the second quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FLDM over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Fluidigm Corporation (NASDAQ:FLDM) was held by Renaissance Technologies, which reported holding $31.1 million worth of stock at the end of March. It was followed by Driehaus Capital with a $26.4 million position. Other investors bullish on the company included Partner Fund Management, Millennium Management, and Citadel Investment Group.
Seeing as Fluidigm Corporation (NASDAQ:FLDM) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few funds that decided to sell off their entire stakes heading into Q3. It’s worth mentioning that Bruce Kovner’s Caxton Associates LP cut the biggest stake of all the hedgies watched by Insider Monkey, valued at about $0.4 million in stock, and Jeffrey Talpins’s Element Capital Management was right behind this move, as the fund sold off about $0.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to Fluidigm Corporation (NASDAQ:FLDM). These stocks are Berry Petroleum Corporation (NASDAQ:BRY), Forestar Group Inc. (NYSE:FOR), MacroGenics Inc (NASDAQ:MGNX), and Adecoagro SA (NYSE:AGRO). This group of stocks’ market values match FLDM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRY | 18 | 192624 | 2 |
| FOR | 4 | 77243 | -3 |
| MGNX | 19 | 115493 | -4 |
| AGRO | 12 | 184237 | -5 |
| Average | 13.25 | 142399 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $137 million in FLDM’s case. MacroGenics Inc (NASDAQ:MGNX) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 4 bullish hedge fund positions. Fluidigm Corporation (NASDAQ:FLDM) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FLDM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FLDM were disappointed as the stock returned -62.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
