The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards iRobot Corporation (NASDAQ:IRBT) .
Is iRobot Corporation (NASDAQ:IRBT) a good stock to buy? The best stock pickers are actually becoming less confident. The number of bullish hedge fund bets fell by 3 right before the 30+% increase in stock price. IRBT was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. There were 15 hedge funds in our database with IRBT holdings on June 30th. At the end of this article we will also compare IRBT to other stocks including COMSCORE, Inc. (NASDAQ:SCOR), ESCO Technologies Inc. (NYSE:ESE), and Kaman Corporation (NYSE:KAMN) to get a better sense of its popularity.
Follow Irobot Corp (NASDAQ:IRBT)
Follow Irobot Corp (NASDAQ:IRBT)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Now, let’s analyze the new action regarding iRobot Corporation (NASDAQ:IRBT).
What have hedge funds been doing with iRobot Corporation (NASDAQ:IRBT)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards IRBT over the last 5 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the biggest position in iRobot Corporation (NASDAQ:IRBT), worth close to $19.8 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Columbus Circle Investors, with a $19 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of Chuck Royce’s Royce & Associates, Renaissance Technologies, one of the largest hedge funds in the world and John Overdeck and David Siegel’s Two Sigma Advisors. 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.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually got rid of their positions entirely. Intriguingly, Willem Mesdag’s Red Mountain Capital got rid of the biggest stake of all the hedgies followed by Insider Monkey, worth an estimated $36.1 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $6.8 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as iRobot Corporation (NASDAQ:IRBT) but similarly valued. These stocks are COMSCORE, Inc. (NASDAQ:SCOR), ESCO Technologies Inc. (NYSE:ESE), Kaman Corporation (NYSE:KAMN), and Standex Int’l Corp. (NYSE:SXI). This group of stocks’ market caps resemble IRBT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCOR | 14 | 234447 | -9 |
| ESE | 5 | 2363 | 1 |
| KAMN | 10 | 223224 | 1 |
| SXI | 10 | 28157 | 0 |
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $62 million in IRBT’s case. COMSCORE, Inc. (NASDAQ:SCOR) is the most popular stock in this table. On the other hand ESCO Technologies Inc. (NYSE:ESE) is the least popular one with only 5 bullish hedge fund positions. iRobot Corporation (NASDAQ:IRBT) is not the most popular stock in this group but hedge fund interest is still above average. Hedge funds actually think SCOR is a better stock than IRBT. Well, they were at least wrong in the short-term because SCOR returned only 5% since the end of September and underperformed IRBT by a large margin.
