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Cree, Inc. (CREE): Are Hedge Funds Right About This Stock?

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Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Cree, Inc. (NASDAQ:CREE) was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. CREE has experienced an increase in support from the world’s most successful money managers recently. There were 11 hedge funds in our database with CREE holdings at the end of the previous quarter. At the end of this article we will also compare CREE to other stocks including F.N.B. Corp (NYSE:FNB), Zynga Inc (NASDAQ:ZNGA), and Buffalo Wild Wings (NASDAQ:BWLD) to get a better sense of its popularity.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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What have hedge funds been doing with Cree, Inc. (NASDAQ:CREE)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 9% from the second quarter of 2016. On the other hand, there were a total of 15 hedge funds with a bullish position in CREE at the beginning of this year. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

CREE Chart

Of the funds tracked by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the number one position in Cree, Inc. (NASDAQ:CREE). Royce & Associates has a $11.9 million position in the stock. On Royce & Associates’s heels is Citadel Investment Group, led by Ken Griffin, which holds a $8.1 million position. Other hedge funds and institutional investors with similar optimism contain Neal Shah’s Valtura Capital Partners, and Matthew Hulsizer’s PEAK6 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.

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