We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Cognex Corporation (NASDAQ:CGNX), and what that likely means for the prospects of the company and its stock.
Is Cognex Corporation (NASDAQ:CGNX) a buy right now? Money managers are categorically turning bullish. The number of long hedge fund positions experienced an increase of 3 recently. In this way, there were 11 hedge funds in our database with CGNX holdings at the end of the previous 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 Taubman Centers, Inc. (NYSE:TCO), Endo Health Solutions Inc (NASDAQ:ENDP), and Genesis Energy, L.P. (NYSE:GEL) to gather more data points.
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How are hedge funds trading Cognex Corporation (NASDAQ:CGNX)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, up by 38% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CGNX over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Royce & Associates, led by Chuck Royce, holds the biggest position in Cognex Corporation (NASDAQ:CGNX). Royce & Associates has a $140.5 million position in the stock. The second most bullish fund manager is Joho Capital, led by Robert Karr, which holds a $89.3 million position; 17.6% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish comprise Principal Global Investors’ Columbus Circle Investors, and D E Shaw, one of the biggest hedge funds in the world. We should note that Joho Capital is 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.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Columbus Circle Investors, assembled the most valuable position in Cognex Corporation (NASDAQ:CGNX). Columbus Circle Investors had $13.1 million invested in the company at the end of the quarter. Bruce Kovner’s Caxton Associates LP also made a $3.7 million investment in the stock during the quarter. The following funds were also among the new CGNX investors: Drew Cupps’ Cupps Capital Management, Ken Griffin’s Citadel Investment Group, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks similar to Cognex Corporation (NASDAQ:CGNX). These stocks are Taubman Centers, Inc. (NYSE:TCO), Endo Health Solutions Inc (NASDAQ:ENDP), Genesis Energy, L.P. (NYSE:GEL), and Match Group Inc(NASDAQ:MTCH). All of these stocks’ market caps resemble CGNX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCO | 19 | 436312 | 1 |
| ENDP | 32 | 797272 | -4 |
| GEL | 7 | 22104 | 0 |
| MTCH | 19 | 90149 | 3 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $336 million. That figure was $256 million in CGNX’s case. Endo Health Solutions Inc (NASDAQ:ENDP) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 7 bullish hedge fund positions. Cognex Corporation (NASDAQ:CGNX) 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 ENDP might be a better candidate to consider taking a long position in.
Disclosure: None
