After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Littelfuse, Inc. (NASDAQ:LFUS).
Littelfuse, Inc. (NASDAQ:LFUS) investors should pay attention to an increase in hedge fund interest of late. Our calculations also showed that LFUS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_258232" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/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. We're going to take a look at the new hedge fund action regarding Littelfuse, Inc. (NASDAQ:LFUS).
What does smart money think about Littelfuse, Inc. (NASDAQ:LFUS)?
At Q3's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in LFUS a year ago. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Littelfuse, Inc. (NASDAQ:LFUS) was held by Fisher Asset Management, which reported holding $91.9 million worth of stock at the end of September. It was followed by Ariel Investments with a $71.4 million position. Other investors bullish on the company included Impax Asset Management, Giverny Capital, and GAMCO Investors. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to Littelfuse, Inc. (NASDAQ:LFUS), around 2.03% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.95 percent of its 13F equity portfolio to LFUS.
Now, specific money managers have been driving this bullishness. Prospector Partners, managed by John D. Gillespie, assembled the most outsized position in Littelfuse, Inc. (NASDAQ:LFUS). Prospector Partners had $2.7 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $1.1 million position during the quarter. The other funds with brand new LFUS positions are Frederick DiSanto's Ancora Advisors, Matthew Hulsizer's PEAK6 Capital Management, and David Andre and Astro Teller's Cerebellum Capital.
Let's now review hedge fund activity in other stocks similar to Littelfuse, Inc. (NASDAQ:LFUS). These stocks are Sabra Health Care REIT Inc (NASDAQ:SBRA), TriNet Group Inc (NYSE:TNET), PacWest Bancorp (NASDAQ:PACW), and Aaron's, Inc. (NYSE:AAN). All of these stocks' market caps are similar to LFUS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SBRA,10,99601,0 TNET,18,419054,-3 PACW,23,251367,3 AAN,18,310016,-4 Average,17.25,270010,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $271 million in LFUS's case. PacWest Bancorp (NASDAQ:PACW) is the most popular stock in this table. On the other hand Sabra Health Care REIT Inc (NASDAQ:SBRA) is the least popular one with only 10 bullish hedge fund positions. Littelfuse, Inc. (NASDAQ:LFUS) 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 LFUS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LFUS were disappointed as the stock returned 2.6% 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.