Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the successful investors’ consensus returns have been exceptional. The top 30 mid-cap stocks among the best performing hedge funds in our database yielded an average return of 18% during the last 12 months, outperforming the S&P 500 Index funds by double digits. Although the successful funds occasionally have their duds, such as SunEdison and Valeant, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of IPG Photonics Corporation (NASDAQ:IPGP).
Overall, IPG Photonics Corporation (NASDAQ:IPGP) has experienced a decrease in activity from the world’s largest hedge funds lately. There were 16 hedge funds in our database with IPGP holdings at the end of the third quarter, compared to 20 funds at the end of June. 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 Realogy Holdings Corp (NYSE:RLGY), Cinemark Holdings, Inc. (NYSE:CNK), and The Madison Square Garden Co (NASDAQ:MSG) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s take a gander at the new action regarding IPG Photonics Corporation (NASDAQ:IPGP).
What have hedge funds been doing with IPG Photonics Corporation (NASDAQ:IPGP)?
Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on IPG Photonics, down by 20% over the quarter. The graph below displays the number of hedge funds with bullish position in IPGP over the last five quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the number one position in IPG Photonics Corporation (NASDAQ:IPGP). Royce & Associates has a $62.3 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Matthew A. Weatherbie’s Weatherbie Capital holding a $27.5 million position; 3.5% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Jim Simons’ Renaissance Technologies, Ken Fisher’s Fisher Asset Management, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. Interestingly, Alexander Roepers’ Atlantic Investment Management said goodbye to the largest stake of all the hedgies studied by Insider Monkey, worth close to $3 million in stock. Crispin Odey’s fund, Odey Asset Management Group, also cut its stock, about $2 million worth.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as IPG Photonics Corporation (NASDAQ:IPGP) but similarly valued. These stocks are Realogy Holdings Corp (NYSE:RLGY), Cinemark Holdings, Inc. (NYSE:CNK), The Madison Square Garden Co (NASDAQ:MSG), and Genesis Energy, L.P. (NYSE:GEL). This group of stocks’ market caps are closest to IPGP’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 23 investors with bullish positions and the average amount invested in these stocks was $571 million. That figure was $143 million in IPGP’s case. Realogy Holdings Corp (NYSE:RLGY) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only seven investors holding shares. IPG Photonics Corporation (NASDAQ:IPGP) 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 Realogy Holdings Corp (NYSE:RLGY) might be a better candidate to consider taking a long position in.