The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards NeoPhotonics Corp (NYSE:NPTN).
Is NeoPhotonics Corp (NYSE:NPTN) undervalued? Investors who are in the know were buying. The number of long hedge fund positions advanced by 3 lately. NeoPhotonics Corp (NYSE:NPTN) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that NPTN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At the moment there are a multitude of signals investors employ to grade stocks. A couple of the best signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top money managers can beat their index-focused peers by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Jamie Zimmerman of Litespeed Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the key hedge fund action regarding NeoPhotonics Corp (NYSE:NPTN).
Do Hedge Funds Think NPTN Is A Good Stock To Buy Now?
At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NPTN over the last 24 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in NeoPhotonics Corp (NYSE:NPTN) was held by Renaissance Technologies, which reported holding $22.4 million worth of stock at the end of June. It was followed by Masters Capital Management with a $10.2 million position. Other investors bullish on the company included Litespeed Management, Two Sigma Advisors, and Boardman Bay Capital Management. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to NeoPhotonics Corp (NYSE:NPTN), around 9.19% of its 13F portfolio. Boardman Bay Capital Management is also relatively very bullish on the stock, designating 7.92 percent of its 13F equity portfolio to NPTN.
Now, specific money managers were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, established the most valuable position in NeoPhotonics Corp (NYSE:NPTN). Alyeska Investment Group had $3.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Peter Muller’s PDT Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NeoPhotonics Corp (NYSE:NPTN) but similarly valued. These stocks are First Community Bancshares Inc (NASDAQ:FCBC), FRP Holdings Inc (NASDAQ:FRPH), Loop Industries, Inc. (NASDAQ:LOOP), Titan International Inc (NYSE:TWI), Riley Exploration Permian, Inc. (NYSE:REPX), Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), and A-Mark Precious Metals, Inc. (NASDAQ:AMRK). This group of stocks’ market valuations are similar to NPTN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FCBC | 6 | 7819 | 1 |
| FRPH | 7 | 35469 | 1 |
| LOOP | 3 | 2092 | 1 |
| TWI | 15 | 121522 | -5 |
| REPX | 6 | 10766 | 4 |
| RRGB | 7 | 13913 | -2 |
| AMRK | 12 | 21555 | 1 |
| Average | 8 | 30448 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $67 million in NPTN’s case. Titan International Inc (NYSE:TWI) is the most popular stock in this table. On the other hand Loop Industries, Inc. (NASDAQ:LOOP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks NeoPhotonics Corp (NYSE:NPTN) is more popular among hedge funds. Our overall hedge fund sentiment score for NPTN is 83. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately NPTN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NPTN were disappointed as the stock returned -7% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Neophotonics Corp (NYSE:NPTN)
Follow Neophotonics Corp (NYSE:NPTN)
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Disclosure: None. This article was originally published at Insider Monkey.
