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We can judge whether Rogers Corporation (NYSE:ROG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Hedge fund interest in Rogers Corporation (NYSE:ROG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare ROG to other stocks including Inovalon Holdings Inc (NASDAQ:INOV), The Ensign Group, Inc. (NASDAQ:ENSG), and Genomic Health, Inc. (NASDAQ:GHDX) to get a better sense of its popularity.
Video: Click the image to 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Ken Fisher of Fisher Asset Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the fresh hedge fund action surrounding Rogers Corporation (NYSE:ROG).
What does smart money think about Rogers Corporation (NYSE:ROG)?
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ROG over the last 17 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Rogers Corporation (NYSE:ROG), with a stake worth $25 million reported as of the end of September. Trailing Fisher Asset Management was Millennium Management, which amassed a stake valued at $10.5 million. Renaissance Technologies, G2 Investment Partners Management, and Tairen Capital 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 Boardman Bay Capital Management allocated the biggest weight to Rogers Corporation (NYSE:ROG), around 1.69% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, earmarking 1.62 percent of its 13F equity portfolio to ROG.
Because Rogers Corporation (NYSE:ROG) has witnessed declining sentiment from hedge fund managers, it's easy to see that there lies a certain "tier" of hedge funds that elected to cut their entire stakes last quarter. Intriguingly, Mark Coe's Intrinsic Edge Capital dumped the largest position of the 750 funds watched by Insider Monkey, comprising about $11.8 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $3.4 million worth. These transactions are important to note, as aggregate 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 Rogers Corporation (NYSE:ROG) but similarly valued. These stocks are Inovalon Holdings Inc (NASDAQ:INOV), The Ensign Group, Inc. (NASDAQ:ENSG), Genomic Health, Inc. (NASDAQ:GHDX), and Kennametal Inc. (NYSE:KMT). This group of stocks' market valuations resemble ROG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INOV,11,21045,4 ENSG,16,118684,2 GHDX,16,946976,-2 KMT,25,288624,5 Average,17,343832,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $344 million. That figure was $74 million in ROG's case. Kennametal Inc. (NYSE:KMT) is the most popular stock in this table. On the other hand Inovalon Holdings Inc (NASDAQ:INOV) is the least popular one with only 11 bullish hedge fund positions. Rogers Corporation (NYSE:ROG) is not the most popular stock in this group but hedge fund interest is still above average. 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ROG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ROG were disappointed as the stock returned -4.9% during the fourth quarter (through the end of November) 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.
Disclosure: None. This article was originally published at Insider Monkey.