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Is Finisar Corporation (FNSR) A Good Stock To Buy?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Finisar Corporation (NASDAQ:FNSR).

Finisar Corporation (NASDAQ:FNSR) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the third quarter of 2015. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TriNet Group Inc (NYSE:TNET), Ramco-Gershenson Properties Trust (NYSE:RPT), and TASER International, Inc. (NASDAQ:TASR) to gather more data points.

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In the eyes of most stock holders, hedge funds are assumed to be underperforming, outdated financial vehicles of the past. While there are greater than 8000 funds in operation at present, Our researchers choose to focus on the elite of this club, around 700 funds. These hedge fund managers oversee the majority of all hedge funds’ total asset base, and by shadowing their first-class investments, Insider Monkey has unsheathed various investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy surpassed 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 glance at the key action regarding Finisar Corporation (NASDAQ:FNSR).

How are hedge funds trading Finisar Corporation (NASDAQ:FNSR)?

At the Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the largest position in Finisar Corporation (NASDAQ:FNSR), worth close to $44.9 million, corresponding to 0.1% of its total 13F portfolio. On Fisher Asset Management’s heels is Carlson Capital, managed by Clint Carlson, which holds a $33.4 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish encompass Anand Parekh’s Alyeska Investment Group, Jim Simons’ Renaissance Technologies and George Soros’s Soros Fund Management.

Judging by the fact that Finisar Corporation (NASDAQ:FNSR) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few hedgies that slashed their positions entirely in the third quarter. Interestingly, Howard Marks’ Oaktree Capital Management cut the biggest stake of the 700 funds monitored by Insider Monkey, comprising close to $32.5 million in stock. Phill Gross and Robert Atchinson’s fund, Adage Capital Management, also dumped its stock, about $9.2 million worth of FNSR shares. These moves are intriguing to say the least, 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 Finisar Corporation (NASDAQ:FNSR). We will take a look at TriNet Group Inc (NYSE:TNET), Ramco-Gershenson Properties Trust (NYSE:RPT), TASER International, Inc. (NASDAQ:TASR), and Gramercy Property Trust Inc (NYSE:GPT). This group of stocks’ market values are closest to FNSR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TNET 17 164159 -8
RPT 16 63430 1
TASR 15 91605 -3
GPT 14 195353 -6

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $151 million in FNSR’s case. TriNet Group Inc (NYSE:TNET) is leading the pack, while Gramercy Property Trust Inc (NYSE:GPT) is the laggard with only 14 bullish hedge fund positions. Compared to these stocks Finisar Corporation (NASDAQ:FNSR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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