The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Multi-Fineline Electronix, Inc. (NASDAQ:MFLX) and see how it was affected.
Multi-Fineline Electronix, Inc. (NASDAQ:MFLX) was in 17 hedge funds’ portfolios at the end of September. MFLX investors should pay attention to an increase in enthusiasm from smart money recently. There were 13 hedge funds in our database with MFLX holdings at the end of the previous quarter. At the end of this article we will also compare MFLX to other stocks including Catchmark Timber Trust Inc (NYSE:CTT), Apollo Residential Mortgage Inc (NYSE:AMTG), and Natural Health Trends Corp. (NASDAQ:NHTC) to get a better sense of its popularity.
Today there are several methods market participants use to value their holdings. A couple of the most innovative methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outclass the broader indices by a healthy margin (see the details here).
With all of this in mind, we’re going to view the key action surrounding Multi-Fineline Electronix, Inc. (NASDAQ:MFLX).
What have hedge funds been doing with Multi-Fineline Electronix, Inc. (NASDAQ:MFLX)?
Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Jim Simons’s Renaissance Technologies has the most valuable position in Multi-Fineline Electronix, Inc. (NASDAQ:MFLX), worth close to $10.2 million, comprising less than 0.1% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $3.2 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions contain Joseph A. Jolson’s Harvest Capital Strategies, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Multi-Fineline Electronix, Inc. (NASDAQ:MFLX) headfirst. Harvest Capital Strategies, managed by Joseph A. Jolson, assembled the largest position in Multi-Fineline Electronix, Inc. (NASDAQ:MFLX). Harvest Capital Strategies had $1.7 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $0.5 million position during the quarter. The only other fund with a brand new MFLX position is Lee Munder’s Lee Munder Capital Group.
Let’s also examine hedge fund activity in other stocks similar to Multi-Fineline Electronix, Inc. (NASDAQ:MFLX). These stocks are Catchmark Timber Trust Inc (NYSE:CTT), Apollo Residential Mortgage Inc (NYSE:AMTG), Natural Health Trends Corp. (NASDAQ:NHTC), and Calix Inc (NYSE:CALX). This group of stocks’ market valuations match MFLX’s market valuation.
|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 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $23 million in MFLX’s case. Calix Inc (NYSE:CALX) is the most popular stock in this table. On the other hand Catchmark Timber Trust Inc (NYSE:CTT) is the least popular one with only 11 bullish hedge fund positions. Multi-Fineline Electronix, Inc. (NASDAQ:MFLX) 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 CALX might be a better candidate to consider a long position.