“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Fox Factory Holding Corp (NASDAQ:FOXF) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Fox Factory Holding Corp (NASDAQ:FOXF) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that FOXF 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.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the fresh hedge fund action encompassing Fox Factory Holding Corp (NASDAQ:FOXF).
What have hedge funds been doing with Fox Factory Holding Corp (NASDAQ:FOXF)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FOXF over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Fox Factory Holding Corp (NASDAQ:FOXF), which was worth $9.4 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $3.8 million worth of shares. Marshall Wace, GLG Partners, and Citadel Investment Group 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 Navellier & Associates allocated the biggest weight to Fox Factory Holding Corp (NASDAQ:FOXF), around 0.11% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to FOXF.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the biggest position in Fox Factory Holding Corp (NASDAQ:FOXF). Marshall Wace had $1.9 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.4 million position during the quarter. The other funds with brand new FOXF positions are Paul Tudor Jones’s Tudor Investment Corp and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks similar to Fox Factory Holding Corp (NASDAQ:FOXF). We will take a look at PennyMac Financial Services Inc (NYSE:PFSI), Granite Real Estate Investment Trust (NYSE:GRP), Xenia Hotels & Resorts Inc (NYSE:XHR), and Hutchison China MediTech Limited (NASDAQ:HCM). This group of stocks’ market caps are similar to FOXF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFSI | 15 | 105400 | -1 |
| GRP | 11 | 81035 | 0 |
| XHR | 8 | 20048 | -4 |
| HCM | 10 | 14449 | -13 |
| Average | 11 | 55233 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $21 million in FOXF’s case. PennyMac Financial Services Inc (NYSE:PFSI) is the most popular stock in this table. On the other hand Xenia Hotels & Resorts Inc (NYSE:XHR) is the least popular one with only 8 bullish hedge fund positions. Fox Factory Holding Corp (NASDAQ:FOXF) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on FOXF, though not to the same extent, as the stock returned 5.9% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
