Hedge Funds Are Buying Brooks Automation, Inc (BRKS)

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Brooks Automation, Inc (NASDAQ:BRKS) investors should pay attention to an increase in hedge fund sentiment of late. BRKS was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with BRKS positions at the end of the previous quarter. At the end of this article we will also compare BRKS to other stocks including HudBay Minerals Inc Ord Shs (NYSE:HBM), Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), and ADTRAN, Inc. (NASDAQ:ADTN) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, let’s go over the key action surrounding Brooks Automation, Inc (NASDAQ:BRKS).

How are hedge funds trading Brooks Automation, Inc (NASDAQ:BRKS)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BRKS over the last 5 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Brooks Automation, Inc (NASDAQ:BRKS), worth close to $36.9 million, accounting for 0.2% of its total 13F portfolio. The second largest stake is held by Ariel Investments, led by John W. Rogers, holding an $11.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Richard Mashaal’s Rima Senvest Management, D. E. Shaw’s D E Shaw, one of the largest hedge funds in the world, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Rima Senvest Management, led by Richard Mashaal, created the biggest position in Brooks Automation, Inc (NASDAQ:BRKS). According to regulatory filings, the fund had $1.9 million invested in the company at the end of the quarter. Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management and Mike Vranos’s Ellington.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Brooks Automation, Inc (NASDAQ:BRKS) but similarly valued. We will take a look at HudBay Minerals Inc Ord Shs (NYSE:HBM), Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), ADTRAN, Inc. (NASDAQ:ADTN), and 1st Source Corporation (NASDAQ:SRCE). This group of stocks’ market valuations match BRKS’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $54 million in BRKS’s case. Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) is the most popular stock in this table. On the other hand 1st Source Corporation (NASDAQ:SRCE) is the least popular one with only 7 bullish hedge fund positions. Brooks Automation, Inc (NASDAQ:BRKS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HIMX might be a better candidate to consider taking a long position in.

Disclosure: none.