Here is What Hedge Funds Think About IPG Photonics Corporation (IPGP)

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

IPG Photonics Corporation (NASDAQ:IPGP) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 24 hedge funds’ portfolios at the end of September. At the end of this article we will also compare IPGP to other stocks, including Casey’s General Stores, Inc. (NASDAQ:CASY), Pitney Bowes Inc. (NYSE:PBI), and Intercept Pharmaceuticals Inc (NASDAQ:ICPT) to get a better sense of its popularity.

To most traders, hedge funds are viewed as slow, outdated investment tools of the past. While there are greater than an 8000 funds trading at present, Our experts choose to focus on the top tier of this club, approximately 700 funds. These hedge fund managers administer the majority of all hedge funds’ total asset base, and by monitoring their finest investments, Insider Monkey has come up with many investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s take a peek at the new action regarding IPG Photonics Corporation (NASDAQ:IPGP).

How have hedgies been trading IPG Photonics Corporation (NASDAQ:IPGP)?

Heading into Q4, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in IPG Photonics Corporation (NASDAQ:IPGP). Royce & Associates has a $33.2 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is owned by Renaissance Technologies, holding a $26 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain Israel Englander’s Millennium Management, Matthew A. Weatherbie’s Weatherbie Capital and D. E. Shaw’s D E Shaw.

Because IPG Photonics Corporation (NASDAQ:IPGP) has witnessed a declination in interest from hedge fund managers, we can see that there is a sect of funds that slashed their full holdings in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest stake of the 700 funds followed by Insider Monkey, comprising close to $3 million in stock, and Brian Ashford-Russell and Tim Woolley’s Polar Capital was right behind this move, as the fund dropped about $2.1 million worth of stock. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to IPG Photonics Corporation (NASDAQ:IPGP). We will take a look at Casey’s General Stores, Inc. (NASDAQ:CASY), Pitney Bowes Inc. (NYSE:PBI), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), and Zebra Technologies Corp. (NASDAQ:ZBRA). All of these stocks’ market caps are similar to IPGP’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $448 million. That figure was just $147 million in IPGP’s case. Zebra Technologies Corp. (NASDAQ:ZBRA) is the most popular stock in this table. On the other hand Intercept Pharmaceuticals Inc (NASDAQ:ICPT) is the least popular one with only 18 bullish hedge fund positions. IPG Photonics Corporation (NASDAQ:IPGP) 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 ZBRA might be a better candidate to consider a long position.