Is Newport Corporation (NEWP) Going to Burn These Bullish Investors?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid the high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined by 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Newport Corporation (NASDAQ:NEWP).

Newport Corporation (NASDAQ:NEWP) was in 20 hedge funds’ portfolios at the end of September. NEWP shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 18 hedge funds in our database with NEWP holdings at the end of the previous quarter. At the end of this article we will also compare NEWP to other stocks including Marten Transport, Ltd (NASDAQ:MRTN), Del Taco Restaurants Inc (NASDAQ:TACO), and Agree Realty Corporation (NYSE:ADC) to get a better sense of its popularity.

In the eyes of most shareholders, hedge funds are seen as unimportant, old financial vehicles of years past. While there are greater than 8,000 funds in operation at the moment, we look at the crème de la crème of this club, around 700 funds. These investment experts oversee the lion’s share of the hedge fund industry’s total capital, and by paying attention to their unrivaled equity investments, Insider Monkey has brought to light many investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, we’re going to take a gander at the fresh action regarding Newport Corporation (NASDAQ:NEWP).

Hedge fund activity in Newport Corporation (NASDAQ:NEWP)

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 11% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or had already accumulated large positions).

According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the number one position in Newport Corporation (NASDAQ:NEWP), worth close to $53.2 million, accounting for 0.3% of its total 13F portfolio. Sitting in the 2 spot is Portolan Capital Management, managed by George McCabe, which holds a $5.8 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain Brian C. Freckmann’s Lyon Street Capital, Tom Henwood’s OMT Capital Management, and Renaissance Technologies.

As aggregate interest increased, some big names have jumped into Newport Corporation (NASDAQ:NEWP) headfirst. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, initiated the most outsized position in Newport Corporation (NASDAQ:NEWP). Algert Coldiron Investors had $0.6 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new NEWP investors: Matthew Tewksbury’s Stevens Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Newport Corporation (NASDAQ:NEWP) but similarly valued. We will take a look at Marten Transport, Ltd (NASDAQ:MRTN), Del Taco Restaurants Inc (NASDAQ:TACO), Agree Realty Corporation (NYSE:ADC), and LGI Homes Inc (NASDAQ:LGIH). This group of stocks’ market values resemble NEWP’s market value.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $85 million in NEWP’s case. Del Taco Restaurants Inc (NASDAQ:TACO) is the most popular stock in this table. On the other hand Agree Realty Corporation (NYSE:ADC) is the least popular one with only 7 bullish hedge fund positions. Newport Corporation (NASDAQ:NEWP) 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 TACO might be a better candidate to consider a long position in.