Smart Money Maintains Confidence In Plexus Corp. (PLXS)

It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.

Plexus Corp. (NASDAQ:PLXS) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds’ portfolios at the end of September. At the end of this article we will also compare Plexus Corp. to other stocks including Super Micro Computer, Inc. (NASDAQ:SMCI), Franklin Electric Co. (NASDAQ:FELE), and TransAlta Corporation (USA) (NYSE:TAC) to get a better sense of its popularity.

To most investors, hedge funds are perceived as worthless, old investment vehicles of years past. While there are over 8,000 funds in operation at the moment, our experts choose to focus on the top tier of this group, approximately 700 funds. Most estimates calculate that this group of people control most of the hedge fund industry’s total asset base, and by observing their unrivaled stock picks, Insider Monkey has unsheathed various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, we’re going to take a look at the latest action encompassing Plexus Corp. (NASDAQ:PLXS).

How have hedgies been trading Plexus Corp. (NASDAQ:PLXS)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or had already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Plexus Corp. (NASDAQ:PLXS). Fisher Asset Management has a $30.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second-most bullish fund manager is Anand Parekh of Alyeska Investment Group, with a $26.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Chuck Royce’s Royce & Associates, Clint Carlson’s Carlson Capital, and Joel Greenblatt’s Gotham Asset Management.

Judging by the fact that Plexus Corp. (NASDAQ:PLXS) has witnessed level interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their entire stakes heading into Q4. At the top of the heap, Neil Chriss’ Hutchin Hill Capital dumped the largest position of all the hedgies watched by Insider Monkey, valued at close to $1.3 million in stock. Mike Vranos’ fund, Ellington, also sold off its stock, about $0.7 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Plexus Corp. (NASDAQ:PLXS) but similarly valued. We will take a look at Super Micro Computer, Inc. (NASDAQ:SMCI), Franklin Electric Co. (NASDAQ:FELE), TransAlta Corporation (USA) (NYSE:TAC), and Companhia Siderurgica Nacional (ADR) (NYSE:SID). This group of stocks’ market valuations are closest to Plexus Corp.’s market valuation.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $108 million in Plexus Corp.’s case. Super Micro Computer, Inc. (NASDAQ:SMCI) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (ADR) (NYSE:SID) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Plexus Corp. (NASDAQ:PLXS) is more popular among hedge funds and has more money invested in it than any of the other stocks. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.