Top Investors Losing Faith In Rogers Corporation (ROG)

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 5.2% in the 12 months ending October 30, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of September 2014) generated a return of 9.5% during the same 12-month period, with 63% of these stock picks outperformed the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 16-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Rogers Corporation (NYSE:ROG).

Rogers Corporation (NYSE:ROG) was in 15 hedge funds’ portfolios at the end of September. Rogers Corporation has experienced a decrease in support from the world’s most elite money managers lately. There were 19 hedge funds in our database with Rogers Corporation positions at the end of the previous quarter. At the end of this article we will also compare Rogers Corporation to other stocks including Boise Cascade Co (NYSE:BCC), Semtech Corporation (NASDAQ:SMTC), and II-VI, Inc. (NASDAQ:IIVI) to get a better sense of its popularity.

According to most market participants, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are more than an 8,000 funds in operation at present, we look at the elite of this group, about 700 funds. Most estimates calculate that this group of people preside over bulk of the hedge fund industry’s total asset base, and by tracking their unrivaled stock picks, Insider Monkey has revealed a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, let’s take a glance at the fresh action encompassing Rogers Corporation (NYSE:ROG).

What does the smart money think about Rogers Corporation (NYSE:ROG)?

Heading into Q4, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a 21% fall from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or had already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Daruma Asset Management, managed by Mariko Gordon, holds the number one position in Rogers Corporation (NYSE:ROG). Daruma Asset Management has a $38.1 million position in the stock, comprising 2.3% of its 13F portfolio. The second-largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $19.9 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain Charles Paquelet’s Skylands Capital, and the quant funds D E Shaw and Renaissance Technologies.

Seeing as Rogers Corporation (NYSE:ROG) has witnessed a declination in interest from hedge fund managers, it’s easy to see that there were a few money managers who were dropping their positions entirely heading into Q4. At the top of the heap, Mark Coe’s Coe Capital Management dropped the biggest stake of all the hedgies monitored by Insider Monkey, totaling about $5.5 million in stock. Ken Gray and Steve Walsh’s fund, Bryn Mawr Capital, also said goodbye to its stock, about $1.6 million worth. These transactions are important to note, as total hedge fund interest was cut by 4 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Rogers Corporation (NYSE:ROG) but similarly valued. These stocks are Boise Cascade Co (NYSE:BCC), Semtech Corporation (NASDAQ:SMTC), II-VI, Inc. (NASDAQ:IIVI), and BancFirst Corporation (NASDAQ:BANF). This group of stocks’ market values match Rogers Corporation’s market value.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $83 million in Rogers Corporation’s case. Boise Cascade Co (NYSE:BCC) is the most popular stock in this table. On the other hand BancFirst Corporation (NASDAQ:BANF) is the least popular one with only 5 bullish hedge fund positions. Rogers Corporation (NYSE:ROG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Boise Cascade Co might be a better candidate to consider for a long position.