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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to CyberOptics Corporation (NASDAQ:CYBE) changed recently.
Is CYBE a good stock to buy now? Hedge fund interest in CyberOptics Corporation (NASDAQ:CYBE) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CYBE 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). At the end of this article we will also compare CYBE to other stocks including Pioneer Bancorp, Inc. (NASDAQ:PBFS), The First Bancorp, Inc. (NASDAQ:FNLC), and Landmark Infrastructure Partners LP (NASDAQ:LMRK) to get a better sense of its popularity.
Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
Peter Rathjens of Arrowstreet Capital
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 let's take a gander at the fresh hedge fund action surrounding CyberOptics Corporation (NASDAQ:CYBE).
Do Hedge Funds Think CYBE Is A Good Stock To Buy Now?
At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in CYBE a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in CyberOptics Corporation (NASDAQ:CYBE), which was worth $6.9 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $4.7 million worth of shares. Millennium Management, Arrowstreet Capital, and Two Sigma Advisors 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 Navellier & Associates allocated the biggest weight to CyberOptics Corporation (NASDAQ:CYBE), around 0.1% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to CYBE.
Due to the fact that CyberOptics Corporation (NASDAQ:CYBE) has experienced a decline in interest from hedge fund managers, it's easy to see that there was a specific group of money managers that slashed their full holdings heading into Q4. It's worth mentioning that Josh Goldberg's G2 Investment Partners Management sold off the largest stake of the "upper crust" of funds tracked by Insider Monkey, totaling about $2.1 million in stock. Ken Griffin's fund, Citadel Investment Group, also dumped its stock, about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as CyberOptics Corporation (NASDAQ:CYBE) but similarly valued. We will take a look at Pioneer Bancorp, Inc. (NASDAQ:PBFS), The First Bancorp, Inc. (NASDAQ:FNLC), Landmark Infrastructure Partners LP (NASDAQ:LMRK), Movado Group, Inc (NYSE:MOV), SC Health Corporation (NYSE:SCPE), American National BankShares Inc (NASDAQ:AMNB), and GigCapital2, Inc. (NYSE:GIX). All of these stocks' market caps match CYBE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBFS,2,2164,-1 FNLC,1,3771,0 LMRK,2,671,1 MOV,20,15927,2 SCPE,15,75596,1 AMNB,4,4379,2 GIX,14,70977,4 Average,8.3,24784,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $20 million in CYBE's case. Movado Group, Inc (NYSE:MOV) is the most popular stock in this table. On the other hand The First Bancorp, Inc. (NASDAQ:FNLC) is the least popular one with only 1 bullish hedge fund positions. CyberOptics Corporation (NASDAQ:CYBE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CYBE is 56.1. 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. This is a slightly positive signal but 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 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 beat the market again by 16.2 percentage points. Unfortunately CYBE wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CYBE were disappointed as the stock returned -11.2% since the end of September (through 12/8) 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 this year.
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Disclosure: None. This article was originally published at Insider Monkey.