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Is Fox Factory Holding Corp (FOXF) A Good Stock To Buy?

After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Fox Factory Holding Corp (NASDAQ:FOXF).

Fox Factory Holding Corp (NASDAQ:FOXF) was in 10 hedge funds’ portfolios at the end of the third quarter of 2018. FOXF shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 9 hedge funds in our database with FOXF positions at the end of the previous quarter. Our calculations also showed that FOXF 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus

We’re going to analyze the fresh hedge fund action encompassing Fox Factory Holding Corp (NASDAQ:FOXF).

Hedge fund activity in Fox Factory Holding Corp (NASDAQ:FOXF)

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in FOXF heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

FOXF_dec2018

Among these funds, Renaissance Technologies held the most valuable stake in Fox Factory Holding Corp (NASDAQ:FOXF), which was worth $6 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $5.5 million worth of shares. Moreover, Driehaus Capital, PDT Partners, and Millennium Management were also bullish on Fox Factory Holding Corp (NASDAQ:FOXF), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, established the biggest position in Fox Factory Holding Corp (NASDAQ:FOXF). Driehaus Capital had $4.4 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $0.4 million investment in the stock during the quarter.

Let’s also examine hedge fund activity in other stocks similar to Fox Factory Holding Corp (NASDAQ:FOXF). These stocks are Medifast, Inc. (NYSE:MED), Seritage Growth Properties (NYSE:SRG), Xenia Hotels & Resorts Inc (NYSE:XHR), and Cabot Microelectronics Corporation (NASDAQ:CCMP). All of these stocks’ market caps match FOXF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MED 22 418518 2
SRG 14 412585 -2
XHR 9 103413 -3
CCMP 19 301066 0
Average 16 308896 -0.75

View table here if you experience formatting issues.

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 $309 million. That figure was $23 million in FOXF’s case. Medifast, Inc. (NYSE:MED) is the most popular stock in this table. On the other hand Xenia Hotels & Resorts Inc (NYSE:XHR) is the least popular one with only 9 bullish hedge fund positions. Fox Factory Holding Corp (NASDAQ:FOXF) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MED might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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