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Is Brooks Automation, Inc. (USA) (BRKS) A Good Stock To Buy?

Hedge funds and other investment firms run by legendary investors like Israel Englander 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 superior performance, which is why we pay particular attention to their best ideas in this space.

Brooks Automation, Inc. (USA) (NASDAQ:BRKS) has experienced an increase in support from the world’s most elite money managers of late. At the end of this article we will also compare BRKS to other stocks, including ARMOUR Residential REIT, Inc. (NYSE:ARR), Griffon Corporation (NYSE:GFF), and Invesco Dynamic Credit Opportunities Fd (NYSE:VTA) to get a better sense of its popularity.

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In today’s marketplace there are tons of gauges investors have at their disposal to value publicly traded companies. Two of the most innovative gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform their index-focused peers by a very impressive margin (see the details here).

With all of this in mind, we’re going to take a look at the latest action regarding Brooks Automation, Inc. (USA) (NASDAQ:BRKS).

Hedge fund activity in Brooks Automation, Inc. (USA) (NASDAQ:BRKS)

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 88% from the second quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Brooks Automation, Inc. (USA) (NASDAQ:BRKS), worth close to $43 million, comprising 0.2% of its total 13F portfolio. The second most bullish fund manager is Bernard Horn of Polaris Capital Management, with a $6.4 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management.

Now, specific money managers have jumped into Brooks Automation, Inc. (USA) (NASDAQ:BRKS) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in Brooks Automation, Inc. (USA) (NASDAQ:BRKS). Citadel Investment Group had $0.6 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Chao Ku’s Nine Chapters Capital Management, Jim Simons’s Renaissance Technologies, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s also examine hedge fund activity in other stocks similar to Brooks Automation, Inc. (USA) (NASDAQ:BRKS). We will take a look at ARMOUR Residential REIT, Inc. (NYSE:ARR), Griffon Corporation (NYSE:GFF), Invesco Dynamic Credit Opportunities Fd (NYSE:VTA), and NCI Building Systems, Inc. (NYSE:NCS). This group of stocks’ market values are closest to BRKS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARR 10 38981 -6
GFF 11 122839 -1
VTA 6 15746 2
NCS 25 78927 8

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $64 million, as compared to $59 million in BRKS’s case. That figure was  NCI Building Systems, Inc. (NYSE:NCS) is the most popular stock in this table. On the other hand Invesco Dynamic Credit Opportunities Fd (NYSE:VTA) is the least popular one with only 6 bullish hedge fund positions. Brooks Automation, Inc. (USA) (NASDAQ:BRKS) is not the most popular stock in this group, but hedge fund interest is still above average. Although this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, NCS might be a better candidate to consider a long position.

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