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Do Hedge Funds Love CyberOptics Corporation (CYBE)?

In this article you are going to find out whether hedge funds think CyberOptics Corporation (NASDAQ:CYBE) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

CyberOptics Corporation (NASDAQ:CYBE) investors should be aware of an increase in enthusiasm from smart money in recent months. CYBE was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with CYBE holdings at the end of the previous quarter. Our calculations also showed that CYBE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are plenty of indicators shareholders employ to assess stocks. Two of the most underrated indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best fund managers can trounce the market by a significant margin (see the details here).

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the new hedge fund action encompassing CyberOptics Corporation (NASDAQ:CYBE).

How are hedge funds trading CyberOptics Corporation (NASDAQ:CYBE)?

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the fourth quarter of 2019. By comparison, 5 hedge funds held shares or bullish call options in CYBE a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Among these funds, Royce & Associates held the most valuable stake in CyberOptics Corporation (NASDAQ:CYBE), which was worth $5.2 million at the end of the third quarter. On the second spot was G2 Investment Partners Management which amassed $4.5 million worth of shares. Millennium Management, Renaissance Technologies, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to CyberOptics Corporation (NASDAQ:CYBE), around 1.49% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to CYBE.

As one would reasonably expect, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in CyberOptics Corporation (NASDAQ:CYBE). Millennium Management had $1.9 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.2 million position during the quarter.

Let’s now review hedge fund activity in other stocks similar to CyberOptics Corporation (NASDAQ:CYBE). These stocks are Sequans Communications S.A. (NYSE:SQNS), NeuBase Therapeutics, Inc. (NASDAQ:NBSE), Fang Holdings Limited (NYSE:SFUN), and Evelo Biosciences, Inc. (NASDAQ:EVLO). This group of stocks’ market valuations resemble CYBE’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SQNS 5 20535 1
NBSE 5 16563 -1
SFUN 4 882 -2
EVLO 3 185 0
Average 4.25 9541 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $14 million in CYBE’s case. Sequans Communications S.A. (NYSE:SQNS) is the most popular stock in this table. On the other hand Evelo Biosciences, Inc. (NASDAQ:EVLO) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks CyberOptics Corporation (NASDAQ:CYBE) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on CYBE as the stock returned 80.6% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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