We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Coherent, Inc. (NASDAQ:COHR) based on that data.
Is Coherent, Inc. (NASDAQ:COHR) ready to rally soon? Investors who are in the know are becoming hopeful. The number of bullish hedge fund positions improved by 9 in recent months. Our calculations also showed that COHR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). COHR was in 28 hedge funds’ portfolios at the end of December. There were 19 hedge funds in our database with COHR holdings at the end of the previous quarter.
Today there are plenty of methods investors can use to grade publicly traded companies. Some of the most useful methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outpace the market by a very impressive margin (see the details here).
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the latest hedge fund action surrounding Coherent, Inc. (NASDAQ:COHR).
What does smart money think about Coherent, Inc. (NASDAQ:COHR)?
Heading into the first quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in COHR a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Coherent, Inc. (NASDAQ:COHR), which was worth $73.4 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $65.7 million worth of shares. BeaconLight Capital, Point72 Asset Management, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position BeaconLight Capital allocated the biggest weight to Coherent, Inc. (NASDAQ:COHR), around 6.94% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, earmarking 1.96 percent of its 13F equity portfolio to COHR.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in Coherent, Inc. (NASDAQ:COHR). Point72 Asset Management had $27 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $4.1 million investment in the stock during the quarter. The following funds were also among the new COHR investors: Noam Gottesman’s GLG Partners, D. E. Shaw’s D E Shaw, and Robert Vincent McHugh’s Jade Capital Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Coherent, Inc. (NASDAQ:COHR) but similarly valued. We will take a look at National Fuel Gas Company (NYSE:NFG), frontdoor, inc. (NASDAQ:FTDR), Five9 Inc (NASDAQ:FIVN), and Equity Commonwealth (NYSE:EQC). This group of stocks’ market values are similar to COHR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NFG | 26 | 179051 | 2 |
| FTDR | 37 | 681826 | -2 |
| FIVN | 35 | 632108 | 2 |
| EQC | 22 | 140966 | -4 |
| Average | 30 | 408488 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $408 million. That figure was $325 million in COHR’s case. frontdoor, inc. (NASDAQ:FTDR) is the most popular stock in this table. On the other hand Equity Commonwealth (NYSE:EQC) is the least popular one with only 22 bullish hedge fund positions. Coherent, Inc. (NASDAQ:COHR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately COHR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); COHR investors were disappointed as the stock returned -36.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
