Cognex Corporation (CGNX): Hedge Fund Sentiment Unchanged

Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.

Hedge fund interest in Cognex Corporation (NASDAQ:CGNX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CGNX to other stocks including Sensata Technologies Holding plc (NYSE:ST), AptarGroup, Inc. (NYSE:ATR), and HollyFrontier Corporation (NYSE:HFC) to get a better sense of its popularity. Our calculations also showed that CGNX isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are seen as underperforming, outdated financial vehicles of the past. While there are more than 8000 funds trading at present, We choose to focus on the masters of this group, approximately 750 funds. These money managers watch over bulk of all hedge funds’ total capital, and by monitoring their unrivaled picks, Insider Monkey has revealed several investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .


Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the new hedge fund action surrounding Cognex Corporation (NASDAQ:CGNX).

How are hedge funds trading Cognex Corporation (NASDAQ:CGNX)?

At Q2’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. On the other hand, there were a total of 16 hedge funds with a bullish position in CGNX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Chuck Royce

Among these funds, Joho Capital held the most valuable stake in Cognex Corporation (NASDAQ:CGNX), which was worth $60.7 million at the end of the second quarter. On the second spot was Polar Capital which amassed $52.3 million worth of shares. Moreover, Royce & Associates, Citadel Investment Group, and AQR Capital Management were also bullish on Cognex Corporation (NASDAQ:CGNX), allocating a large percentage of their portfolios to this stock.

Seeing as Cognex Corporation (NASDAQ:CGNX) has witnessed falling interest from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that elected to cut their positions entirely last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest investment of all the hedgies watched by Insider Monkey, valued at about $10.4 million in stock, and Joe Milano’s Greenhouse Funds was right behind this move, as the fund dumped about $8.6 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Cognex Corporation (NASDAQ:CGNX). We will take a look at Sensata Technologies Holding plc (NYSE:ST), AptarGroup, Inc. (NYSE:ATR), HollyFrontier Corporation (NYSE:HFC), and Alaska Air Group, Inc. (NYSE:ALK). This group of stocks’ market values are similar to CGNX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ST 21 1181343 0
ATR 20 95998 5
HFC 25 596896 0
ALK 22 559529 2
Average 22 608442 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $608 million. That figure was $273 million in CGNX’s case. HollyFrontier Corporation (NYSE:HFC) is the most popular stock in this table. On the other hand AptarGroup, Inc. (NYSE:ATR) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Cognex Corporation (NASDAQ:CGNX) is even less popular than ATR. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CGNX, though not to the same extent, as the stock returned 2.5% during the third quarter and outperformed the market as well.

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