It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in FormFactor, Inc. (NASDAQ:FORM).
Is FormFactor, Inc. (NASDAQ:FORM) the right pick for your portfolio? The sentiment towards the stock among smart money investors in our database seems to be improving, as the number of investors bullish on FormFactor went up by two to 16 during the third quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tailored Brands Inc (NYSE:TLRD), Raptor Pharmaceutical Corp. (NASDAQ:RPTP), and Bankrate Inc (NYSE:RATE) to gather more data points.
Follow Formfactor Inc (NASDAQ:FORM)
Follow Formfactor Inc (NASDAQ:FORM)
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Keeping this in mind, let’s analyze the key action surrounding FormFactor, Inc. (NASDAQ:FORM).
How have hedgies been trading FormFactor, Inc. (NASDAQ:FORM)?
As stated earlier, at the end of September, 16 funds tracked by Insider Monkey were long FormFactor, an increase of 14% from the second quarter of 2016. On the other hand, there were a total of 15 hedge funds with a bullish position in FORM at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the biggest hedge funds in the world, holds the largest position in FormFactor, Inc. (NASDAQ:FORM). Renaissance Technologies has a $27 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $15.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that are bullish contain Seymour Sy Kaufman and Michael Stark’s Crosslink Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Ken Fisher’s Fisher Asset Management. We should note that none of these hedge funds 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 were leading the bulls’ herd. Dialectic Capital Management, led by John Fichthorn, assembled the most valuable position in FormFactor, Inc. (NASDAQ:FORM). Dialectic Capital Management had $1 million invested in the company at the end of the quarter. Drew Cupps’s Cupps Capital Management also initiated a $0.7 million position during the quarter. The following funds were also among the new FORM investors: Josh Goldberg’s G2 Investment Partners Management, Frank Slattery’s Symmetry Peak Management, and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to FormFactor, Inc. (NASDAQ:FORM). These stocks are Tailored Brands Inc (NYSE:TLRD), Raptor Pharmaceutical Corp. (NASDAQ:RPTP), Bankrate Inc (NYSE:RATE), and ANI Pharmaceuticals Inc (NASDAQ:ANIP). This group of stocks’ market values are similar to FORM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TLRD | 25 | 252791 | 6 |
| RPTP | 17 | 125492 | 2 |
| RATE | 17 | 58556 | -1 |
| ANIP | 16 | 76155 | 2 |
As you can see these stocks had an average of 19 funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $72 million in FORM’s case. Tailored Brands Inc (NYSE:TLRD) is the most popular stock in this table. On the other hand ANI Pharmaceuticals Inc (NASDAQ:ANIP) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks FormFactor, Inc. (NASDAQ:FORM) has the same number of funds with long positions as ANIP. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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