Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Fox Factory Holding Corp (NASDAQ:FOXF) from the perspective of those elite funds.
Fox Factory Holding Corp (NASDAQ:FOXF)’s stock has gained 18% since the beginning of the year, prompting some investors to start collecting profits. In this way, FOXF registered a decrease in popularity among the funds we track. However, 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 Community Trust Bancorp, Inc. (NASDAQ:CTBI), Hemisphere Media Group Inc (NASDAQ:HMTV), and Albany Molecular Research, Inc. (NASDAQ:AMRI) to gather more data points.
In the 21st century investor’s toolkit there are a lot of indicators shareholders put to use to value publicly traded companies. A duo of the most underrated indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outclass their index-focused peers by a solid margin (see the details here).
Keeping this in mind, let’s view the key action regarding Fox Factory Holding Corp (NASDAQ:FOXF).
Hedge fund activity in Fox Factory Holding Corp (NASDAQ:FOXF)
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 42% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Charles Paquelet’s Skylands Capital has the number one position in Fox Factory Holding Corp (NASDAQ:FOXF), worth close to $6 million, corresponding to 0.8% of its total 13F portfolio. On Skylands Capital’s heels is Royce & Associates, managed by Chuck Royce, which holds a $3.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Ken Griffin’s Citadel Investment Group, Jim Simons’ Renaissance Technologies, and Peter Muller’s PDT Partners.
Because Fox Factory Holding Corp (NASDAQ:FOXF) has experienced a declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedge funds that decided to sell off their positions entirely in the third quarter. Intriguingly, Israel Englander’s Millennium Management said goodbye to the largest investment of the 700 funds monitored by Insider Monkey, previously valued at about $0.6 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also sold off its stock, about $0.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Fox Factory Holding Corp (NASDAQ:FOXF). These stocks are Community Trust Bancorp, Inc. (NASDAQ:CTBI), Hemisphere Media Group Inc (NASDAQ:HMTV), Albany Molecular Research, Inc. (NASDAQ:AMRI), and TTM Technologies, Inc. (NASDAQ:TTMI). This group of stocks’ market caps match FOXF’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 12 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $12 million in FOXF’s case. TTM Technologies, Inc. (NASDAQ:TTMI) is the most popular stock in this table. On the other hand Community Trust Bancorp, Inc. (NASDAQ:CTBI) is the least popular one with only 4 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 TTMI might be a better candidate to consider a long position.