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 experienced strong gains on the back of a strong market performance, 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 nLIGHT, Inc. (NASDAQ:LASR).
Is LASR a good stock to buy now? Money managers were becoming hopeful. The number of long hedge fund positions went up by 1 recently. nLIGHT, Inc. (NASDAQ:LASR) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 12. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LASR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 12 hedge funds in our database with LASR holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to check out the fresh hedge fund action surrounding nLIGHT, Inc. (NASDAQ:LASR).
Do Hedge Funds Think LASR Is A Good Stock To Buy Now?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2020. By comparison, 8 hedge funds held shares or bullish call options in LASR a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Driehaus Capital, managed by Richard Driehaus, holds the biggest position in nLIGHT, Inc. (NASDAQ:LASR). Driehaus Capital has a $18.9 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Royce & Associates, managed by Chuck Royce, which holds a $18.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Bryan Hinmon’s Motley Fool Asset Management, Richard Mashaal’s Rima Senvest Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Motley Fool Asset Management allocated the biggest weight to nLIGHT, Inc. (NASDAQ:LASR), around 0.77% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, earmarking 0.39 percent of its 13F equity portfolio to LASR.
As aggregate interest increased, key money managers have been driving this bullishness. Engineers Gate Manager, managed by Greg Eisner, established the biggest position in nLIGHT, Inc. (NASDAQ:LASR). Engineers Gate Manager had $1 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.9 million investment in the stock during the quarter. The other funds with brand new LASR positions are Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now review hedge fund activity in other stocks similar to nLIGHT, Inc. (NASDAQ:LASR). These stocks are Teekay LNG Partners L.P. (NYSE:TGP), Crestwood Equity Partners LP (NYSE:CEQP), Acadia Realty Trust (NYSE:AKR), Rattler Midstream LP (NASDAQ:RTLR), Liberty Oilfield Services Inc. (NYSE:LBRT), Chase Corporation (NYSE:CCF), and Huron Consulting Group Inc. (NASDAQ:HURN). This group of stocks’ market values match LASR’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $57 million in LASR’s case. Acadia Realty Trust (NYSE:AKR) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) is the least popular one with only 2 bullish hedge fund positions. nLIGHT, Inc. (NASDAQ:LASR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LASR is 81.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on LASR as the stock returned 50.3% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.