Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the second quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 6.6 percentage points through May 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Nanometrics Incorporated (NASDAQ:NANO) has seen a decrease in activity from the world’s largest hedge funds in recent months. NANO was in 16 hedge funds’ portfolios at the end of the first quarter of 2019. There were 19 hedge funds in our database with NANO holdings at the end of the previous quarter. Our calculations also showed that nano isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are seen as worthless, old investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts hone in on the masters of this club, about 750 funds. These hedge fund managers command bulk of the smart money’s total capital, and by following their finest stock picks, Insider Monkey has formulated various investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s take a glance at the new hedge fund action surrounding Nanometrics Incorporated (NASDAQ:NANO).
What have hedge funds been doing with Nanometrics Incorporated (NASDAQ:NANO)?
At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the fourth quarter of 2018. By comparison, 16 hedge funds held shares or bullish call options in NANO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Nanometrics Incorporated (NASDAQ:NANO), which was worth $32.1 million at the end of the first quarter. On the second spot was Fisher Asset Management which amassed $28.1 million worth of shares. Moreover, Royce & Associates, Two Sigma Advisors, and D E Shaw were also bullish on Nanometrics Incorporated (NASDAQ:NANO), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Nanometrics Incorporated (NASDAQ:NANO) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedgies that elected to cut their positions entirely in the third quarter. Interestingly, Minhua Zhang’s Weld Capital Management cut the biggest position of the 700 funds tracked by Insider Monkey, totaling close to $0.8 million in stock. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also dropped its stock, about $0.5 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Nanometrics Incorporated (NASDAQ:NANO) but similarly valued. These stocks are Global Brass and Copper Holdings Inc (NYSE:BRSS), WideOpenWest, Inc. (NYSE:WOW), Lakeland Bancorp, Inc. (NASDAQ:LBAI), and TrustCo Bank Corp NY (NASDAQ:TRST). All of these stocks’ market caps resemble NANO’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $102 million in NANO’s case. Global Brass and Copper Holdings Inc (NYSE:BRSS) is the most popular stock in this table. On the other hand TrustCo Bank Corp NY (NASDAQ:TRST) is the least popular one with only 10 bullish hedge fund positions. Nanometrics Incorporated (NASDAQ:NANO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on NANO as the stock returned 9% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.