Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Finisar Corporation (FNSR) Falls After Earnings Slide: Is It A Good Stock To Buy?

Page 1 of 2

Is Finisar Corporation (NASDAQ:FNSR) a good stock to buy? The company’s share price has dropped over 10% in today’s trading session after it reported a massive drop in earnings on Thursday. For its fiscal fourth quarter of 2015, which ended May 3, 2015, Finisar Corporation reported earnings of $7.3 million, or $0.07 per share, substantially down from $28.8 million, or $0.28 per share, in the year-ago quarter. Adjusted earnings also slid to $26.9 million, or $0.25 per share, from $37.5 million, or $0.36 per share, in the same quarter last year. According to Thomson Reuters, the consensus was for adjusted earnings of $0.25 per share. The drop in EPS was despite an increase in revenues to $320.04 million from $306.03 million in the year-ago quarter, a slight miss on the expected revenues $320.50 million. It should be said, however, that investors should pay attention to a recent increase in enthusiasm in Finisar Corporation (NASDAQ:FNSR) from smart money, which we’ll look at in this article.

Finisar Corporation, FNSR

First, a quick word about why we track hedge fund activity and insider sentiment. In 2014, equity hedge funds returned just 1.4%. In 2013, that figure was 11.3%, and in 2012, they returned just 4.8%. These are embarrassingly low figures compared to the S&P 500 ETF (SPY)’s 13.5% gain in 2014, 32.3% gain in 2013, and 16% gain in 2012. Does this mean that hedge fund managers are dumber than a bucket of rocks when it comes to picking stocks? The answer is definitely no. Our small-cap hedge fund strategy, which identifies the best small-cap stock picks of the best hedge fund managers, returned 28.2% in 2014, 53.2% in 2013, and 33.3% in 2012, outperforming the market each year (it’s outperforming it so far in 2015 too). What’s the reason for this discrepancy you may ask? The reason is simple: size. Hedge funds have gotten so large, they have to allocate the majority of their money into large-cap liquid stocks that are more efficiently priced. They are like mutual funds now. Consider Ray Dalio’s Bridgewater Associates, the largest in the industry with about $165 billion in AUM. It can’t allocate too much money into a small-cap stock as merely obtaining 2% exposure would really move the price. In fact, Dalio can’t even obtain 2% exposure to many small-cap stocks, even if he essentially owned the entire company, as they’re simply too small (or rather, his fund is too big). This is where we come in. Our research has shown that it is actually hedge funds’ small-cap picks that are their best performing ones and we have consistently identified the best picks of the best managers, returning 144% since the launch of our small-cap strategy compared to less than 60% for the S&P 500 (see the details).

Ray Dalio
Ray Dalio
Bridgewater Associates

In terms of insider sentiment, we see Finisar Corporation (NASDAQ:FNSR) Executive Vice President of Global Operations, Joseph Young, sold 2,200 shares of the company this month. Executive Chairman of the Board, Jerry Rawls, also sold 62,499 shares in April, split between two trades.

With this in mind, let’s examine the latest action among hedge funds in our database surrounding Finisar Corporation (NASDAQ:FNSR).

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!