Cardiovascular Systems Inc (CSII): Are Hedge Funds Right About This Stock?

Cardiovascular Systems Inc (NASDAQ:CSII) was in 12 hedge funds’ portfolio at the end of March. CSII investors should be aware of an increase in enthusiasm from smart money of late. There were 6 hedge funds in our database with CSII holdings at the end of the previous quarter.

In the eyes of most traders, hedge funds are seen as unimportant, outdated financial tools of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey hone in on the elite of this club, around 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by watching their top picks, we have spotted a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, positive insider trading sentiment is a second way to break down the stock market universe. Obviously, there are lots of stimuli for an insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this tactic if “monkeys” know what to do (learn more here).

With all of this in mind, it’s important to take a glance at the latest action encompassing Cardiovascular Systems Inc (NASDAQ:CSII).

How have hedgies been trading Cardiovascular Systems Inc (NASDAQ:CSII)?

In preparation for this quarter, a total of 12 of the hedge funds we track were long in this stock, a change of 100% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Phill Gross and Robert Atchinson’s Adage Capital Management had the biggest position in Cardiovascular Systems Inc (NASDAQ:CSII), worth close to $12.3 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which held a $8.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish include D. E. Shaw’s D E Shaw, James E. Flynn’s Deerfield Management and Jim Simons’s Renaissance Technologies.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Cardiovascular Systems Inc (NASDAQ:CSII) headfirst. Millennium Management, managed by Israel Englander, initiated the most outsized position in Cardiovascular Systems Inc (NASDAQ:CSII). Millennium Management had 8.4 million invested in the company at the end of the quarter. James Dondero’s Highland Capital Management also initiated a $0.9 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Donald Chiboucis’s Columbus Circle Investors, and Jeffrey Vinik’s Vinik Asset Management.

How have insiders been trading Cardiovascular Systems Inc (NASDAQ:CSII)?

Bullish insider trading is best served when the primary stock in question has seen transactions within the past half-year. Over the last six-month time period, Cardiovascular Systems Inc (NASDAQ:CSII) has experienced 1 unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Cardiovascular Systems Inc (NASDAQ:CSII). These stocks are Cynosure, Inc. (NASDAQ:CYNO), MAKO Surgical Corp. (NASDAQ:MAKO), Symmetry Medical Inc. (NYSE:SMA), Invacare Corporation (NYSE:IVC), and Given Imaging Ltd. (NASDAQ:GIVN). All of these stocks are in the medical appliances & equipment industry and their market caps resemble CSII’s market cap.