In this article we will take a look at whether hedge funds think Cryolife Inc (NYSE:CRY) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Cryolife Inc (NYSE:CRY) was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. CRY investors should pay attention to a decrease in enthusiasm from smart money lately. There were 10 hedge funds in our database with CRY holdings at the end of the previous quarter. Our calculations also showed that CRY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
Phill Gross of Adage Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the key hedge fund action regarding Cryolife Inc (NYSE:CRY).
Hedge fund activity in Cryolife Inc (NYSE:CRY)
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -30% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in CRY a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Juniper Investment Company, managed by Alexis Michas and John Bartholdson, holds the most valuable position in Cryolife Inc (NYSE:CRY). Juniper Investment Company has a $27.2 million position in the stock, comprising 42% of its 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $3.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism contain Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Juniper Investment Company allocated the biggest weight to Cryolife Inc (NYSE:CRY), around 42.02% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to CRY.
Judging by the fact that Cryolife Inc (NYSE:CRY) has faced bearish sentiment from the smart money, it’s easy to see that there was a specific group of funds who were dropping their positions entirely last quarter. Intriguingly, Joseph Edelman’s Perceptive Advisors dumped the biggest investment of all the hedgies followed by Insider Monkey, totaling close to $1.4 million in stock. Mark McMeans’s fund, Brasada Capital Management, also dumped its stock, about $1.1 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cryolife Inc (NYSE:CRY) but similarly valued. We will take a look at New Mountain Finance Corp. (NYSE:NMFC), Stock Yards Bancorp, Inc. (NASDAQ:SYBT), PetIQ, Inc. (NASDAQ:PETQ), and Avita Medical Limited (NASDAQ:RCEL). This group of stocks’ market caps resemble CRY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NMFC | 13 | 13539 | -4 |
| SYBT | 7 | 12244 | -1 |
| PETQ | 13 | 87376 | -2 |
| RCEL | 3 | 32836 | 0 |
| Average | 9 | 36499 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $35 million in CRY’s case. New Mountain Finance Corp. (NYSE:NMFC) is the most popular stock in this table. On the other hand Avita Medical Limited (NASDAQ:RCEL) is the least popular one with only 3 bullish hedge fund positions. Cryolife Inc (NYSE:CRY) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on CRY as the stock returned 43.9% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
