At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Brooks Automation, Inc. (NASDAQ:BRKS).
Brooks Automation, Inc. (NASDAQ:BRKS) was in 18 hedge funds’ portfolios at the end of March. BRKS has experienced a decrease in hedge fund interest of late. There were 28 hedge funds in our database with BRKS positions at the end of the previous quarter. Our calculations also showed that BRKS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
Paul Marshall of Marshall Wace
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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing Brooks Automation, Inc. (NASDAQ:BRKS).
Hedge fund activity in Brooks Automation, Inc. (NASDAQ:BRKS)
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BRKS over the last 18 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 Brooks Automation, Inc. (NASDAQ:BRKS) was held by Fisher Asset Management, which reported holding $34.7 million worth of stock at the end of September. It was followed by Royce & Associates with a $25.1 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace LLP, and D E Shaw. In terms of the portfolio weights assigned to each position Voce Capital allocated the biggest weight to Brooks Automation, Inc. (NASDAQ:BRKS), around 2.45% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, dishing out 0.83 percent of its 13F equity portfolio to BRKS.
Since Brooks Automation, Inc. (NASDAQ:BRKS) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies who were dropping their positions entirely in the first quarter. It’s worth mentioning that Paolo Mortarotti’s Tower House Partners said goodbye to the largest investment of all the hedgies watched by Insider Monkey, comprising close to $44.1 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 10 funds in the first quarter.
Let’s go over hedge fund activity in other stocks similar to Brooks Automation, Inc. (NASDAQ:BRKS). We will take a look at Mercury General Corporation (NYSE:MCY), Sabra Health Care REIT Inc (NASDAQ:SBRA), Itron, Inc. (NASDAQ:ITRI), and Quaker Chemical Corp (NYSE:KWR). All of these stocks’ market caps resemble BRKS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCY | 22 | 193565 | 1 |
| SBRA | 17 | 146830 | -10 |
| ITRI | 19 | 246826 | -2 |
| KWR | 8 | 120286 | -1 |
| Average | 16.5 | 176877 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $99 million in BRKS’s case. Mercury General Corporation (NYSE:MCY) is the most popular stock in this table. On the other hand Quaker Chemical Corp (NYSE:KWR) is the least popular one with only 8 bullish hedge fund positions. Brooks Automation, Inc. (NASDAQ:BRKS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on BRKS as the stock returned 39.5% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
