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Did Hedge Funds Make The Right Call On Rogers Corporation (ROG)?

Debasis Saha

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtRogers Corporation (NYSE:ROG) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Rogers Corporation (NYSE:ROG) shareholders have witnessed a decrease in hedge fund interest lately. ROG was in 19 hedge funds' portfolios at the end of March. There were 21 hedge funds in our database with ROG positions at the end of the previous quarter. Our calculations also showed that ROG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

TUDOR INVESTMENT CORP
TUDOR INVESTMENT CORP

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we're going to analyze the fresh hedge fund action encompassing Rogers Corporation (NYSE:ROG).

What does smart money think about Rogers Corporation (NYSE:ROG)?

At Q1's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ROG over the last 18 quarters. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is ROG A Good Stock To Buy?
Is ROG A Good Stock To Buy?

Among these funds, Royce & Associates held the most valuable stake in Rogers Corporation (NYSE:ROG), which was worth $23.2 million at the end of the third quarter. On the second spot was ACK Asset Management which amassed $21.9 million worth of shares. Fisher Asset Management, Skylands Capital, and D E Shaw 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 ACK Asset Management allocated the biggest weight to Rogers Corporation (NYSE:ROG), around 10.92% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, setting aside 0.62 percent of its 13F equity portfolio to ROG.

Seeing as Rogers Corporation (NYSE:ROG) has experienced bearish sentiment from the smart money, we can see that there is a sect of money managers who sold off their positions entirely by the end of the first quarter. It's worth mentioning that Noam Gottesman's GLG Partners cut the largest stake of the 750 funds watched by Insider Monkey, worth an estimated $1.7 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also cut its stock, about $1.7 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the first quarter.

Let's also examine hedge fund activity in other stocks similar to Rogers Corporation (NYSE:ROG). We will take a look at Vonage Holdings Corp. (NYSE:VG), BankUnited Inc (NYSE:BKU), PolyOne Corporation (NYSE:POL), and International Bancshares Corp (NASDAQ:IBOC). This group of stocks' market caps match ROG's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VG,25,206818,-10 BKU,18,172092,-7 POL,28,165324,4 IBOC,16,96910,-4 Average,21.75,160286,-4.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $77 million in ROG's case. PolyOne Corporation (NYSE:POL) is the most popular stock in this table. On the other hand International Bancshares Corp (NASDAQ:IBOC) is the least popular one with only 16 bullish hedge fund positions. Rogers Corporation (NYSE:ROG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on ROG as the stock returned 40.8% since the end of March and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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