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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Brooks Automation, Inc. (NASDAQ:BRKS).
Brooks Automation, Inc. (NASDAQ:BRKS) investors should pay attention to an increase in activity from the world's largest hedge funds in recent months. Brooks Automation, Inc. (NASDAQ:BRKS) was in 32 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 25 hedge funds in our database with BRKS positions at the end of the first quarter. Our calculations also showed that BRKS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Fisher of Fisher Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's view the recent hedge fund action surrounding Brooks Automation, Inc. (NASDAQ:BRKS).
Do Hedge Funds Think BRKS Is A Good Stock To Buy Now?
At second quarter's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 28% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in BRKS a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Brooks Automation, Inc. (NASDAQ:BRKS), which was worth $97.1 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $83 million worth of shares. Tower House Partners, Nitorum Capital, and Point72 Asset Management 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 Tower House Partners allocated the biggest weight to Brooks Automation, Inc. (NASDAQ:BRKS), around 24.69% of its 13F portfolio. Totem Point Management is also relatively very bullish on the stock, designating 5.43 percent of its 13F equity portfolio to BRKS.
Now, specific money managers have jumped into Brooks Automation, Inc. (NASDAQ:BRKS) headfirst. Nitorum Capital, managed by Seth Rosen, established the largest position in Brooks Automation, Inc. (NASDAQ:BRKS). Nitorum Capital had $46.5 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $40.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Jinghua Yan's TwinBeech Capital, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's go over hedge fund activity in other stocks similar to Brooks Automation, Inc. (NASDAQ:BRKS). We will take a look at Freshpet Inc (NASDAQ:FRPT), Harley-Davidson, Inc. (NYSE:HOG), Mattel, Inc. (NASDAQ:MAT), First Financial Bankshares Inc (NASDAQ:FFIN), Cabot Oil & Gas Corporation (NYSE:COG), Envista Holdings Corporation (NYSE:NVST), and Pacific Biosciences of California, Inc. (NASDAQ:PACB). This group of stocks' market valuations match BRKS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRPT,28,270573,9 HOG,37,1121681,9 MAT,25,928960,0 FFIN,8,25565,-3 COG,25,348750,5 NVST,38,1136990,4 PACB,28,1644777,4 Average,27,782471,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $782 million. That figure was $510 million in BRKS's case. Envista Holdings Corporation (NYSE:NVST) is the most popular stock in this table. On the other hand First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 8 bullish hedge fund positions. Brooks Automation, Inc. (NASDAQ:BRKS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BRKS is 80. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on BRKS as the stock returned 8.7% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.