Here is What Hedge Funds Think About Oclaro, Inc. (OCLR)

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Oclaro, Inc. (NASDAQ:OCLR) .

So, is Oclaro, Inc. (NASDAQ:OCLR) a bargain? It looks like investors who are in the know are taking a bullish view. More specifically, among the funds we track at Insider Monkey, 41 funds held shares of Oclaro at the end of September, up by 12 funds from the end of the second quarter. At the end of this article we will also compare OCLR to other stocks including Cubic Corporation (NYSE:CUB), Franklin Street Properties Corp. (NYSEAMEX:FSP), and WesBanco, Inc. (NASDAQ:WSBC) 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, we’re going to take a look at the key action regarding Oclaro, Inc. (NASDAQ:OCLR).

Hedge fund activity in Oclaro, Inc. (NASDAQ:OCLR)

At the end of September, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on Oclaro, a change of 41% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OCLR over the last five quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Alex Sacerdote’s Whale Rock Capital Management holds the number one position in Oclaro, Inc. (NASDAQ:OCLR). Whale Rock Capital Management has a $57.2 million position in the stock, comprising 3.7% of its 13F portfolio. Coming in second is Alyeska Investment Group, led by Anand Parekh, holding a $27.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Richard Driehaus’ Driehaus Capital, Don Morgan’s Brigade Capital, and Israel Englander’s Millennium Management. We should note that two of these hedge funds (Whale Rock Capital Management and Brigade Capital) 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.

Consequently, key money managers have jumped into Oclaro, Inc. (NASDAQ:OCLR) headfirst. Jim Simons’ Renaissance Technologies initiated the largest position in Oclaro, Inc. (NASDAQ:OCLR). Renaissance Technologies had $12.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $10.1 million investment in the stock during the quarter. The other funds with brand new OCLR positions are D. E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Oclaro, Inc. (NASDAQ:OCLR) but similarly valued. These stocks are Cubic Corporation (NYSE:CUB), Franklin Street Properties Corp. (NYSEAMEX:FSP), WesBanco, Inc. (NASDAQ:WSBC), and Shake Shack Inc (NYSE:SHAK). This group of stocks’ market caps are similar to OCLR’s market cap.

As you can see these stocks had an average of 11 investors with long positions and the average amount invested in these stocks was $71 million. That figure was $248 million in OCLR’s case. Cubic Corporation (NYSE:CUB) is the most popular stock in this table. On the other hand WesBanco, Inc. (NASDAQ:WSBC) is the least popular one with only seven bullish hedge fund positions. Compared to these stocks Oclaro, Inc. (NASDAQ:OCLR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.