Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Nanometrics Incorporated (NASDAQ:NANO).
Nanometrics Incorporated (NASDAQ:NANO) shareholders have witnessed an increase in enthusiasm from smart money recently. Our calculations also showed that NANO isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the key hedge fund action surrounding Nanometrics Incorporated (NASDAQ:NANO).
What have hedge funds been doing with Nanometrics Incorporated (NASDAQ:NANO)?
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards NANO over the last 14 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 Nanometrics Incorporated (NASDAQ:NANO) was held by Fisher Asset Management, which reported holding $28.1 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $26 million position. Other investors bullish on the company included Millennium Management, Royce & Associates, and Two Sigma Advisors.
As aggregate interest increased, specific money managers were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, initiated the largest position in Nanometrics Incorporated (NASDAQ:NANO). GLG Partners had $2.2 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also made a $0.8 million investment in the stock during the quarter. The only other fund with a new position in the stock is Hoon Kim’s Quantinno Capital.
Let’s also examine hedge fund activity in other stocks similar to Nanometrics Incorporated (NASDAQ:NANO). These stocks are PetIQ, Inc. (NASDAQ:PETQ), Thermon Group Holdings, Inc. (NYSE:THR), TransMontaigne Partners L.P. (NYSE:TLP), and Kornit Digital Ltd. (NASDAQ:KRNT). All of these stocks’ market caps resemble NANO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PETQ | 13 | 54011 | -9 |
| THR | 7 | 28568 | -3 |
| TLP | 4 | 26709 | 3 |
| KRNT | 14 | 50837 | 5 |
| Average | 9.5 | 40031 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $100 million in NANO’s case. Kornit Digital Ltd. (NASDAQ:KRNT) is the most popular stock in this table. On the other hand TransMontaigne Partners L.P. (NYSE:TLP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Nanometrics Incorporated (NASDAQ:NANO) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on NANO, though not to the same extent, as the stock returned 17.1% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
