Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Here’s What Hedge Funds Think About Ferro Corporation (FOE)

Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Ferro Corporation (NYSE:FOE) an exceptional stock to buy now? The smart money is becoming more confident. The number of long hedge fund bets went up by 1 in recent months. Our calculations also showed that FOE isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Jonathan Barrett Luminus Management

Let’s take a glance at the recent hedge fund action surrounding Ferro Corporation (NYSE:FOE).

How have hedgies been trading Ferro Corporation (NYSE:FOE)?

Heading into the first quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in FOE a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

FOE_apr2019

The largest stake in Ferro Corporation (NYSE:FOE) was held by GAMCO Investors, which reported holding $67.1 million worth of stock at the end of December. It was followed by Luminus Management with a $58.7 million position. Other investors bullish on the company included Scopus Asset Management, Brigade Capital, and Royce & Associates.

As one would reasonably expect, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in Ferro Corporation (NYSE:FOE). Citadel Investment Group had $0.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.9 million position during the quarter. The following funds were also among the new FOE investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Minhua Zhang’s Weld Capital Management, and Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks similar to Ferro Corporation (NYSE:FOE). These stocks are Hawaiian Holdings, Inc. (NASDAQ:HA), Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), Matthews International Corp (NASDAQ:MATW), and Raven Industries, Inc. (NASDAQ:RAVN). This group of stocks’ market caps match FOE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HA 14 86673 0
TRHC 12 24139 2
MATW 12 53497 0
RAVN 15 75979 0
Average 13.25 60072 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $211 million in FOE’s case. Raven Industries, Inc. (NASDAQ:RAVN) is the most popular stock in this table. On the other hand Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Ferro Corporation (NYSE:FOE) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately FOE wasn’t nearly as popular as these 15 stock and hedge funds that were betting on FOE were disappointed as the stock returned 14.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...