With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Brooks Automation, Inc. (NASDAQ:BRKS).
Is BRKS stock a buy? Prominent investors were becoming hopeful. The number of long hedge fund positions went up by 8 in recent months. Brooks Automation, Inc. (NASDAQ:BRKS) was in 25 hedge funds' portfolios at the end of December. The all time high for this statistic is 28. Our calculations also showed that BRKS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind we're going to go over the new hedge fund action regarding Brooks Automation, Inc. (NASDAQ:BRKS).
Do Hedge Funds Think BRKS Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in BRKS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Brooks Automation, Inc. (NASDAQ:BRKS), with a stake worth $69.3 million reported as of the end of December. Trailing Fisher Asset Management was Royce & Associates, which amassed a stake valued at $29.3 million. Arrowstreet Capital, Millennium Management, and Osterweis Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Totem Point Management allocated the biggest weight to Brooks Automation, Inc. (NASDAQ:BRKS), around 2.47% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.6 percent of its 13F equity portfolio to BRKS.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Brooks Automation, Inc. (NASDAQ:BRKS). Arrowstreet Capital had $13.1 million invested in the company at the end of the quarter. Neal Nathani and Darren Dinneen's Totem Point Management also made a $6 million investment in the stock during the quarter. The other funds with brand new BRKS positions are Steve Cohen's Point72 Asset Management, Greg Eisner's Engineers Gate Manager, and Richard Mashaal's Rima Senvest Management.
Let's check out hedge fund activity in other stocks similar to Brooks Automation, Inc. (NASDAQ:BRKS). These stocks are Kemper Corporation (NYSE:KMPR), Emcor Group Inc (NYSE:EME), Digital Turbine Inc (NASDAQ:APPS), Medallia, Inc. (NYSE:MDLA), Regal Beloit Corporation (NYSE:RBC), Medpace Holdings, Inc. (NASDAQ:MEDP), and Cousins Properties Incorporated (NYSE:CUZ). This group of stocks' market values resemble BRKS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KMPR,13,44437,-5 EME,25,169975,-4 APPS,23,318095,0 MDLA,21,428312,-3 RBC,25,308385,0 MEDP,25,248031,-6 CUZ,16,52738,3 Average,21.1,224282,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $224 million. That figure was $174 million in BRKS's case. Emcor Group Inc (NYSE:EME) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 13 bullish hedge fund positions. Brooks Automation, Inc. (NASDAQ:BRKS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BRKS is 86.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on BRKS as the stock returned 44.6% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.