Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Ferro Corporation (NYSE:FOE) based on that data and determine whether they were really smart about the stock.
Ferro Corporation (NYSE:FOE) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 28. FOE shareholders have witnessed an increase in hedge fund interest recently. There were 16 hedge funds in our database with FOE positions at the end of the first quarter. Our calculations also showed that FOE isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now we’re going to take a glance at the fresh hedge fund action encompassing Ferro Corporation (NYSE:FOE).
Hedge fund activity in Ferro Corporation (NYSE:FOE)
At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the first quarter of 2020. On the other hand, there were a total of 14 hedge funds with a bullish position in FOE a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, GAMCO Investors, managed by Mario Gabelli, holds the largest position in Ferro Corporation (NYSE:FOE). GAMCO Investors has a $50.8 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Leon Cooperman of Omega Advisors, with a $38.5 million position; the fund has 4.4% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish comprise Don Morgan’s Brigade Capital, Jonathan Barrett and Paul Segal’s Luminus Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Omega Advisors allocated the biggest weight to Ferro Corporation (NYSE:FOE), around 4.4% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, earmarking 1.44 percent of its 13F equity portfolio to FOE.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Gotham Asset Management, managed by Joel Greenblatt, created the biggest position in Ferro Corporation (NYSE:FOE). Gotham Asset Management had $0.5 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0.3 million position during the quarter. The other funds with brand new FOE positions are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ferro Corporation (NYSE:FOE) but similarly valued. We will take a look at BGC Partners, Inc. (NASDAQ:BGCP), Virtusa Corporation (NASDAQ:VRTU), Ladder Capital Corp (NYSE:LADR), National HealthCare Corporation (NYSE:NHC), Eventbrite, Inc. (NYSE:EB), Kite Realty Group Trust (NYSE:KRG), and Purple Innovation, Inc. (NASDAQ:PRPL). This group of stocks’ market caps are similar to FOE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $150 million in FOE’s case. BGC Partners, Inc. (NASDAQ:BGCP) is the most popular stock in this table. On the other hand Kite Realty Group Trust (NYSE:KRG) is the least popular one with only 10 bullish hedge fund positions. Ferro Corporation (NYSE:FOE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FOE is 48.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately FOE wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FOE were disappointed as the stock returned 3.9% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.