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Is FARO Technologies, Inc. (FARO) A Good Stock To Buy?

Seeing as FARO Technologies, Inc. (NASDAQ:FARO) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that slashed their entire stakes in the third quarter. It’s worth mentioning that Ken Grossman and Glen Schneider’s SG Capital Management said goodbye to the biggest stake of the 700 funds tracked by Insider Monkey, worth an estimated $7.8 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $0.2 million worth. These bearish behaviors are interesting, as aggregate 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 FARO Technologies, Inc. (NASDAQ:FARO). These stocks are Altra Holdings, Inc. (NASDAQ:AIMC), CTS Corporation (NYSE:CTS), Bojangles Inc (NASDAQ:BOJA), and Dot Hill Systems Corp. (NASDAQ:HILL). This group of stocks’ market valuations resemble FARO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AIMC 7 20354 0
CTS 8 73333 -1
BOJA 13 71765 4
HILL 17 85763 -4

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $26 million in FARO’s case. Dot Hill Systems Corp. (NASDAQ:HILL) is the most popular stock in this table. On the other hand Altra Holdings, Inc. (NASDAQ:AIMC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks FARO Technologies, Inc. (NASDAQ:FARO) is as less popular as AIMC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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