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Hedge Funds Souring On Coherent, Inc. (COHR)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Coherent, Inc. (NASDAQ:COHR)?

Coherent, Inc. (NASDAQ:COHR) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. COHR was in 23 hedge funds’ portfolios at the end of March. There were 28 hedge funds in our database with COHR holdings at the end of the previous quarter. Our calculations also showed that COHR 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

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 trades like this one. 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 we’re going to take a glance at the key hedge fund action regarding Coherent, Inc. (NASDAQ:COHR).

How are hedge funds trading Coherent, Inc. (NASDAQ:COHR)?

Heading into the second quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in COHR over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the largest position in Coherent, Inc. (NASDAQ:COHR), worth close to $55.6 million, comprising 0.8% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $42.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass Ed Bosek’s BeaconLight Capital, Dmitry Balyasny’s Balyasny Asset Management and Mark Coe’s Intrinsic Edge Capital. In terms of the portfolio weights assigned to each position BeaconLight Capital allocated the biggest weight to Coherent, Inc. (NASDAQ:COHR), around 6.13% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, dishing out 1.81 percent of its 13F equity portfolio to COHR.

Since Coherent, Inc. (NASDAQ:COHR) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedgies who were dropping their full holdings heading into Q4. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest stake of all the hedgies followed by Insider Monkey, comprising about $24.9 million in stock, and Leon Shaulov’s Maplelane Capital was right behind this move, as the fund said goodbye to about $20 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Coherent, Inc. (NASDAQ:COHR) but similarly valued. We will take a look at Viavi Solutions Inc (NASDAQ:VIAV), CRISPR Therapeutics AG (NASDAQ:CRSP), Inovalon Holdings Inc (NASDAQ:INOV), and Radian Group Inc (NYSE:RDN). All of these stocks’ market caps match COHR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VIAV 31 305459 -6
CRSP 31 197848 1
INOV 15 71699 -1
RDN 28 121169 -1
Average 26.25 174044 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $174 million. That figure was $173 million in COHR’s case. Viavi Solutions Inc (NASDAQ:VIAV) is the most popular stock in this table. On the other hand Inovalon Holdings Inc (NASDAQ:INOV) is the least popular one with only 15 bullish hedge fund positions. Coherent, Inc. (NASDAQ:COHR) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on COHR as the stock returned 41.4% during the second quarter and outperformed the market by an even larger margin.

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