Does Forrester Research, Inc. (NASDAQ:FORR) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Forrester Research, Inc. (NASDAQ:FORR) ready to rally soon? The smart money is buying. The number of bullish hedge fund bets inched up by 3 lately. Our calculations also showed that FORR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). FORR was in 13 hedge funds' portfolios at the end of September. There were 10 hedge funds in our database with FORR holdings at the end of the previous quarter. 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.
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the key hedge fund action encompassing Forrester Research, Inc. (NASDAQ:FORR).
How have hedgies been trading Forrester Research, Inc. (NASDAQ:FORR)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the second quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in FORR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Forrester Research, Inc. (NASDAQ:FORR) was held by Renaissance Technologies, which reported holding $29.9 million worth of stock at the end of September. It was followed by Millennium Management with a $3.2 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace, and GLG Partners. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Forrester Research, Inc. (NASDAQ:FORR), around 0.12% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to FORR.
As one would reasonably expect, key hedge funds were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, established the most valuable position in Forrester Research, Inc. (NASDAQ:FORR). Marshall Wace had $2.8 million invested in the company at the end of the quarter. David E. Shaw's D E Shaw also made a $1.3 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding's Winton Capital Management, Minhua Zhang's Weld Capital Management, and Paul Tudor Jones's Tudor Investment Corp.
Let's go over hedge fund activity in other stocks similar to Forrester Research, Inc. (NASDAQ:FORR). We will take a look at Karyopharm Therapeutics Inc (NASDAQ:KPTI), Navigator Holdings Ltd (NYSE:NVGS), Translate Bio, Inc. (NASDAQ:TBIO), and nLIGHT, Inc. (NASDAQ:LASR). This group of stocks' market valuations are similar to FORR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KPTI,13,232234,0 NVGS,15,276019,1 TBIO,10,228827,0 LASR,6,41084,1 Average,11,194541,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $47 million in FORR's case. Navigator Holdings Ltd (NYSE:NVGS) is the most popular stock in this table. On the other hand nLIGHT, Inc. (NASDAQ:LASR) is the least popular one with only 6 bullish hedge fund positions. Forrester Research, Inc. (NASDAQ:FORR) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on FORR as the stock returned 24.2% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.