In this article we will take a look at whether hedge funds think IPG Photonics Corporation (NASDAQ:IPGP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is IPG Photonics Corporation (NASDAQ:IPGP) undervalued? Prominent investors are taking a pessimistic view. The number of long hedge fund bets retreated by 5 recently. Our calculations also showed that IPGP 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 today’s marketplace there are a lot of gauges investors use to analyze publicly traded companies. A pair of the less known gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top money managers can trounce their index-focused peers by a very impressive amount (see the details here).
Dmitry Balyasny of Balyasny Asset Management
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 take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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 latest hedge fund action regarding IPG Photonics Corporation (NASDAQ:IPGP).
How are hedge funds trading IPG Photonics Corporation (NASDAQ:IPGP)?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in IPGP a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Impax Asset Management, managed by Ian Simm, holds the most valuable position in IPG Photonics Corporation (NASDAQ:IPGP). Impax Asset Management has a $37 million position in the stock, comprising 0.5% of its 13F portfolio. On Impax Asset Management’s heels is Chuck Royce of Royce & Associates, with a $23.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain Ken Fisher’s Fisher Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and Bryan Hinmon’s Motley Fool Asset Management. In terms of the portfolio weights assigned to each position Tenzing Global Investors allocated the biggest weight to IPG Photonics Corporation (NASDAQ:IPGP), around 5.02% of its 13F portfolio. Indus Capital is also relatively very bullish on the stock, setting aside 2.08 percent of its 13F equity portfolio to IPGP.
Judging by the fact that IPG Photonics Corporation (NASDAQ:IPGP) has witnessed bearish sentiment from the smart money, logic holds that there were a few funds who sold off their full holdings last quarter. Intriguingly, Steve Cohen’s Point72 Asset Management said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $17 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $13.8 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to IPG Photonics Corporation (NASDAQ:IPGP). We will take a look at Natura &Co Holding S.A. (NYSE:NTCO), Proofpoint Inc (NASDAQ:PFPT), Generac Holdings Inc. (NYSE:GNRC), and Bunge Limited (NYSE:BG). This group of stocks’ market caps resemble IPGP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NTCO | 8 | 66680 | 8 |
| PFPT | 27 | 315504 | -8 |
| GNRC | 29 | 192057 | -3 |
| BG | 39 | 543155 | 2 |
| Average | 25.75 | 279349 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $150 million in IPGP’s case. Bunge Limited (NYSE:BG) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 8 bullish hedge fund positions. IPG Photonics Corporation (NASDAQ:IPGP) is not the least popular stock in this group but hedge fund interest is still below 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on IPGP as the stock returned 48.4% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
