Is Finisar Corporation (NASDAQ:FNSR) 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, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is Finisar Corporation (NASDAQ:FNSR) a first-rate investment today? Investors who are in the know are getting more bullish. The number of bullish hedge fund positions increased by 2 recently. Our calculations also showed that fnsr isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a look at the new hedge fund action surrounding Finisar Corporation (NASDAQ:FNSR).
What does the smart money think about Finisar Corporation (NASDAQ:FNSR)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in FNSR heading into this year. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Finisar Corporation (NASDAQ:FNSR), with a stake worth $70.9 million reported as of the end of September. Trailing Fisher Asset Management was Royce & Associates, which amassed a stake valued at $17 million. Point72 Asset Management, Harvest Capital Strategies, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, assembled the most outsized position in Finisar Corporation (NASDAQ:FNSR). Point72 Asset Management had $11.2 million invested in the company at the end of the quarter. Larry Chen and Terry Zhang’s Tairen Capital also made a $0.6 million investment in the stock during the quarter. The only other fund with a brand new FNSR position is David Andre and Astro Teller’s Cerebellum Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Finisar Corporation (NASDAQ:FNSR) but similarly valued. These stocks are First Merchants Corporation (NASDAQ:FRME), TowneBank (NASDAQ:TOWN), Yirendai Ltd. (NYSE:YRD), and FCB Financial Holdings Inc (NYSE:FCB). All of these stocks’ market caps match FNSR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRME | 13 | 152575 | 0 |
| TOWN | 9 | 44046 | -1 |
| YRD | 5 | 15068 | -2 |
| FCB | 23 | 211302 | 5 |
| Average | 12.5 | 105748 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $120 million in FNSR’s case. FCB Financial Holdings Inc (NYSE:FCB) is the most popular stock in this table. On the other hand Yirendai Ltd. (NYSE:YRD) is the least popular one with only 5 bullish hedge fund positions. Finisar Corporation (NASDAQ:FNSR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FCB might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
