The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards FormFactor, Inc. (NASDAQ:FORM).
FormFactor, Inc. (NASDAQ:FORM) has experienced a decrease in hedge fund sentiment recently. Our calculations also showed that FORM isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 18 percentage points since May 2014 through December 3, 2018 (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.
Let’s take a peek at the recent hedge fund action regarding FormFactor, Inc. (NASDAQ:FORM).
Hedge fund activity in FormFactor, Inc. (NASDAQ:FORM)
Heading into the fourth quarter of 2018, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FORM over the last 13 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in FormFactor, Inc. (NASDAQ:FORM) was held by Royce & Associates, which reported holding $20.1 million worth of stock at the end of September. It was followed by AQR Capital Management with a $9 million position. Other investors bullish on the company included Crosslink Capital, Fisher Asset Management, and Point72 Asset Management.
Since FormFactor, Inc. (NASDAQ:FORM) has faced declining sentiment from hedge fund managers, logic holds that there was a specific group of hedge funds that decided to sell off their entire stakes last quarter. At the top of the heap, David Costen Haley’s HBK Investments said goodbye to the biggest investment of the 700 funds monitored by Insider Monkey, totaling close to $0.8 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to FormFactor, Inc. (NASDAQ:FORM). These stocks are Hyster-Yale Materials Handling Inc (NYSE:HY), Precision Drilling Corp (NYSE:PDS), ScanSource, Inc. (NASDAQ:SCSC), and Universal Health Realty Income Trust (NYSE:UHT). This group of stocks’ market valuations are closest to FORM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HY | 10 | 43925 | -4 |
| PDS | 15 | 46799 | -1 |
| SCSC | 8 | 57637 | -2 |
| UHT | 4 | 39397 | 2 |
| Average | 9.25 | 46940 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $44 million in FORM’s case. Precision Drilling Corp (NYSE:PDS) is the most popular stock in this table. On the other hand Universal Health Realty Income Trust (NYSE:UHT) is the least popular one with only 4 bullish hedge fund positions. FormFactor, Inc. (NASDAQ:FORM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PDS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
