Were Hedge Funds Right About Selling Rogers Corporation (ROG)?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Rogers Corporation (NYSE:ROG).

Rogers Corporation (NYSE:ROG) has experienced a decrease in hedge fund sentiment of late. Rogers Corporation (NYSE:ROG) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 21. Our calculations also showed that ROG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s go over the recent hedge fund action encompassing Rogers Corporation (NYSE:ROG).

Do Hedge Funds Think ROG Is A Good Stock To Buy Now?

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ROG over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Rogers Corporation (NYSE:ROG) was held by Hill City Capital, which reported holding $95 million worth of stock at the end of December. It was followed by Royce & Associates with a $55.1 million position. Other investors bullish on the company included Fisher Asset Management, ACK Asset Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Hill City Capital allocated the biggest weight to Rogers Corporation (NYSE:ROG), around 29.1% of its 13F portfolio. ACK Asset Management is also relatively very bullish on the stock, dishing out 8.14 percent of its 13F equity portfolio to ROG.

Seeing as Rogers Corporation (NYSE:ROG) has experienced declining sentiment from the smart money, we can see that there was a specific group of funds that slashed their positions entirely by the end of the first quarter. At the top of the heap, Brandon Haley’s Holocene Advisors said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, valued at about $0.8 million in stock. David Harding’s fund, Winton Capital Management, also dropped its stock, about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Rogers Corporation (NYSE:ROG). These stocks are Grocery Outlet Holding Corp. (NASDAQ:GO), Moelis & Company (NYSE:MC), Insmed Incorporated (NASDAQ:INSM), Extended Stay America Inc (NYSE:STAY), FormFactor, Inc. (NASDAQ:FORM), ALLETE Inc (NYSE:ALE), and Worthington Industries, Inc. (NYSE:WOR). All of these stocks’ market caps are similar to ROG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $228 million in ROG’s case. Extended Stay America Inc (NYSE:STAY) is the most popular stock in this table. On the other hand Worthington Industries, Inc. (NYSE:WOR) is the least popular one with only 14 bullish hedge fund positions. Rogers Corporation (NYSE:ROG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ROG is 32.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately ROG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ROG investors were disappointed as the stock returned 3.3% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.