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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 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 September 30th, about a month before the elections. In this article we look at what those investors think of Fabrinet (NYSE:FN).
Is FN a good stock to buy now? Fabrinet (NYSE:FN) investors should be aware of a decrease in activity from the world's largest hedge funds recently. Fabrinet (NYSE:FN) was in 17 hedge funds' portfolios at the end of September. The all time high for this statistic is 25. Our calculations also showed that FN 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are perceived as slow, old investment vehicles of the past. While there are more than 8000 funds trading at the moment, Our researchers choose to focus on the moguls of this club, approximately 850 funds. Most estimates calculate that this group of people orchestrate bulk of all hedge funds' total asset base, and by tailing their highest performing investments, Insider Monkey has uncovered a number of investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
John Overdeck of Two Sigma Advisors
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. With all of this in mind let's take a peek at the fresh hedge fund action surrounding Fabrinet (NYSE:FN).
Do Hedge Funds Think FN Is A Good Stock To Buy Now?
At third quarter's end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in FN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Fabrinet (NYSE:FN), with a stake worth $30.3 million reported as of the end of September. Trailing Royce & Associates was Divisar Capital, which amassed a stake valued at $13.5 million. GLG Partners, Renaissance Technologies, 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 Divisar Capital allocated the biggest weight to Fabrinet (NYSE:FN), around 4.46% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, designating 1.82 percent of its 13F equity portfolio to FN.
Due to the fact that Fabrinet (NYSE:FN) has experienced falling interest from the smart money, we can see that there was a specific group of hedge funds that elected to cut their entire stakes last quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dumped the largest stake of the "upper crust" of funds watched by Insider Monkey, worth an estimated $10.1 million in stock. Ken Griffin's fund, Citadel Investment Group, also cut its stock, about $6.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 6 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Fabrinet (NYSE:FN). These stocks are Trinity Industries, Inc. (NYSE:TRN), Nelnet, Inc. (NYSE:NNI), Wintrust Financial Corporation (NASDAQ:WTFC), Revolution Medicines, Inc. (NASDAQ:RVMD), Mercury General Corporation (NYSE:MCY), TreeHouse Foods Inc. (NYSE:THS), and Focus Financial Partners Inc. (NASDAQ:FOCS). This group of stocks' market valuations match FN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRN,23,766000,-2 NNI,13,133382,1 WTFC,20,113331,-3 RVMD,15,371222,2 MCY,21,152030,4 THS,30,189124,-2 FOCS,11,60571,2 Average,19,255094,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $75 million in FN's case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand Focus Financial Partners Inc. (NASDAQ:FOCS) is the least popular one with only 11 bullish hedge fund positions. Fabrinet (NYSE:FN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FN is 35.2. 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 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on FN as the stock returned 10.7% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.