The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Infinera Corp. (NASDAQ:INFN) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Infinera Corp. (NASDAQ:INFN) has seen an increase in hedge fund interest in recent months. INFN was in 18 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with INFN positions at the end of the previous quarter. Our calculations also showed that INFN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Eric Singer of VIEX Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the latest hedge fund action regarding Infinera Corp. (NASDAQ:INFN).
How have hedgies been trading Infinera Corp. (NASDAQ:INFN)?
Heading into the fourth quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 64% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in INFN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Greenhouse Funds, managed by Joe Milano, created the most outsized position in Infinera Corp. (NASDAQ:INFN). Greenhouse Funds had $25,8 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also initiated a $3 million position during the quarter. The following funds were also among the new INFN investors: Mark Broach’s Manatuck Hill Partners, Brian C. Freckmann’s Lyon Street Capital, and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks similar to Infinera Corp. (NASDAQ:INFN). We will take a look at Materialise NV (NASDAQ:MTLS), Re/Max Holdings Inc (NYSE:RMAX), Livent Corporation (NYSE:LTHM), and National Western Life Insurance Company (NASDAQ:NWLI). All of these stocks’ market caps match INFN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position | |
|---|---|---|---|---|
| MTLS | 2 | 9352 | 0 | |
| RMAX | 9 | 91557 | -1 | |
| LTHM | 20 | 123690 | -1 | |
| NWLI | 9 | 16662 | 1 | |
| Average | 10 | 60315 | -0 | 25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $175 million in INFN’s case. Livent Corporation (NYSE:LTHM) is the most popular stock in this table. On the other hand Materialise NV (NASDAQ:MTLS) is the least popular one with only 2 bullish hedge fund positions. Infinera Corp. (NASDAQ:INFN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on INFN as the stock returned 17,1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
