Exactech, Inc. (EXAC): Are Hedge Funds Right About This Stock?

Is Exactech, Inc. (NASDAQ:EXAC) a buy right now? Money managers are becoming more confident. The number of long hedge fund positions increased by 2 in recent months.

According to most investors, hedge funds are perceived as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds trading at the moment, we at Insider Monkey hone in on the moguls of this club, around 450 funds. It is estimated that this group controls the majority of the smart money’s total asset base, and by keeping an eye on their highest performing investments, we have found a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed 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 key, bullish insider trading sentiment is a second way to parse down the marketplace. Just as you’d expect, there are plenty of incentives for an executive to drop shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, it’s important to take a look at the key action surrounding Exactech, Inc. (NASDAQ:EXAC).

How have hedgies been trading Exactech, Inc. (NASDAQ:EXAC)?

Heading into Q2, a total of 6 of the hedge funds we track were bullish in this stock, a change of 50% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the largest position in Exactech, Inc. (NASDAQ:EXAC). Royce & Associates has a $21.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Mario Gabelli of GAMCO Investors, with a $13.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Clifford G. Fox’s Columbus Circle Investors, Nathan Fischel’s DAFNA Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Consequently, some big names have been driving this bullishness. Columbus Circle Investors, managed by Clifford G. Fox, initiated the biggest position in Exactech, Inc. (NASDAQ:EXAC). Columbus Circle Investors had 1.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.5 million position during the quarter.

How have insiders been trading Exactech, Inc. (NASDAQ:EXAC)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has seen transactions within the past half-year. Over the last six-month time frame, Exactech, Inc. (NASDAQ:EXAC) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Exactech, Inc. (NASDAQ:EXAC). These stocks are RTI Biologics Inc. (NASDAQ:RTIX), Accuray Incorporated (NASDAQ:ARAY), PhotoMedex Inc (NASDAQ:PHMD), Navidea Biopharmaceuticals Inc (NYSEAMEX:NAVB), and Palomar Medical Technologies Inc (NASDAQ:PMTI). This group of stocks are the members of the medical appliances & equipment industry and their market caps are closest to EXAC’s market cap.