The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded nLIGHT, Inc. (NASDAQ:LASR) based on those filings.
Hedge fund interest in nLIGHT, Inc. (NASDAQ:LASR) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare LASR to other stocks including Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), Banc of California, Inc. (NYSE:BANC), and Partner Communications Company Ltd (NASDAQ:PTNR) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the fresh hedge fund action regarding nLIGHT, Inc. (NASDAQ:LASR).
How have hedgies been trading nLIGHT, Inc. (NASDAQ:LASR)?
At the end of the second quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LASR over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in nLIGHT, Inc. (NASDAQ:LASR). Royce & Associates has a $41.2 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is ACK Asset Management, led by Richard S. Meisenberg, holding a $7.9 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions contain Ian Simm’s Impax Asset Management, Renaissance Technologies and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Seeing as nLIGHT, Inc. (NASDAQ:LASR) has faced a decline in interest from hedge fund managers, we can see that there were a few hedge funds who sold off their full holdings in the second quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, valued at close to $2.2 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $1.6 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as nLIGHT, Inc. (NASDAQ:LASR) but similarly valued. We will take a look at Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), Banc of California, Inc. (NYSE:BANC), Partner Communications Company Ltd (NASDAQ:PTNR), and Camden National Corporation (NASDAQ:CAC). This group of stocks’ market values resemble 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 10 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $52 million in LASR’s case. Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) is the most popular stock in this table. On the other hand Partner Communications Company Ltd (NASDAQ:PTNR) is the least popular one with only 2 bullish hedge fund positions. nLIGHT, Inc. (NASDAQ:LASR) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately LASR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LASR investors were disappointed as the stock returned -18.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.