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Do Hedge Funds Love FormFactor, Inc. (FORM)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like FormFactor, Inc. (NASDAQ:FORM).

Is FormFactor, Inc. (NASDAQ:FORM) the right pick for your portfolio? The best stock pickers are buying. The number of bullish hedge fund positions moved up by 1 lately. At the end of this article, we will also compare FormFactor, Inc. (NASDAQ:FORM) to other stocks, including Rudolph Technologies Inc (NASDAQ:RTEC), Peoples Bancorp Inc. (NASDAQ:PEBO), and JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) to get a better sense of its popularity.

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In the 21st century investor’s toolkit, there are a lot of signals that stock traders put to use to analyze publicly traded companies. A duo of the less utilized signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the S&P 500 by a solid amount (see the details here).

Keeping this in mind, let’s go over the latest action surrounding FormFactor, Inc. (NASDAQ:FORM).

How have hedgies been trading FormFactor, Inc. (NASDAQ:FORM)?

Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 6% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the most valuable position in FormFactor, Inc. (NASDAQ:FORM). Renaissance Technologies has a $9.8 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $7.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Seymour Sy Kaufman and Michael Stark’s Crosslink Capital, Cliff Asness’ AQR Capital Management and Ken Fisher’s Fisher Asset Management.

Now, some big names were leading the bulls’ herd. Fisher Asset Management initiated the largest position in FormFactor, Inc. (NASDAQ:FORM). Fisher Asset Management had $2 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $2 million position during the quarter. The other funds with brand new FormFactor, Inc. (NASDAQ:FORM) positions are Glenn Russell Dubin’s Highbridge Capital Management, Israel Englander’s Millennium Management, and Peter Algert and Kevin ColdirAon’s lgert Coldiron Investors.

Let’s check out hedge fund activity in other stocks similar to FormFactor, Inc. (NASDAQ:FORM). These stocks are Rudolph Technologies Inc (NASDAQ:RTEC), Peoples Bancorp Inc. (NASDAQ:PEBO), JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO), and Almost Family, Inc. (NASDAQ:AFAM). This group of stocks’ market valuations resembles FormFactor, Inc. (NASDAQ:FORM)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RTEC 19 46402 8
PEBO 6 21262 -2
JASO 5 16392 -4
AFAM 13 71911 2

As you can see, these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $39 million, versus $34 million in FormFactor, Inc. (NASDAQ:FORM)’s case. Rudolph Technologies Inc (NASDAQ:RTEC) is the most popular stock in this table. On the other hand, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) is the least popular one with only 5 bullish hedge fund positions. FormFactor, Inc. (NASDAQ:FORM) 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 RTEC might be a better candidate to consider a long position.

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