Is Littelfuse, Inc. (LFUS) Going to Burn These Hedge Funds?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Littelfuse, Inc. (NASDAQ:LFUS) .

Hedge fund interest in Littelfuse, Inc. (NASDAQ:LFUS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare LFUS to other stocks including SLM Corp (NASDAQ:SLM), Columbia Property Trust Inc (NYSE:CXP), and Worthington Industries, Inc. (NYSE:WOR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, let’s analyze the recent action surrounding Littelfuse, Inc. (NASDAQ:LFUS).

What have hedge funds been doing with Littelfuse, Inc. (NASDAQ:LFUS)?

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LFUS over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ariel Investments, led by John W. Rogers, holds the biggest position in Littelfuse, Inc. (NASDAQ:LFUS). According to regulatory filings, the fund has a $76.5 million position in the stock, comprising 0.9% of its 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $55.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Mario Gabelli’s GAMCO Investors, Jim Simons’s Renaissance Technologies and Andrew Sandler’s Sandler Capital 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.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Tudor Investment Corp. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case with Littelfuse, Inc. (NASDAQ:LFUS) because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Sandler Capital Management).

Let’s now take a look at hedge fund activity in other stocks similar to Littelfuse, Inc. (NASDAQ:LFUS). These stocks are SLM Corp (NASDAQ:SLM), Columbia Property Trust Inc (NYSE:CXP), Worthington Industries, Inc. (NYSE:WOR), and Horizon Pharma Inc (NASDAQ:HZNP). This group of stocks’ market values resemble LFUS’s market value.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $287 million. That figure was $179 million in LFUS’s case. Horizon Pharma Inc (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Columbia Property Trust Inc (NYSE:CXP) is the least popular one with only 11 bullish hedge fund positions. Littelfuse, Inc. (NASDAQ:LFUS) 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. In this regard HZNP might be a better candidate to consider taking a long position in.

Disclosure: none.