Hedge Funds Are Buying Endologix, Inc. (ELGX)

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Endologix, Inc. (NASDAQ:ELGX).

Endologix, Inc. shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. ELGX was in 21 hedge funds’ portfolios at the end of the third quarter of 2015. There were 17 hedge funds in our database with ELGX holdings at the end of the previous quarter. At the end of this article we will also compare ELGX to other stocks including Teekay Tankers Ltd. (NYSE:TNK), Rentrak Corporation (NASDAQ:RENT), and Barracuda Networks Inc (NYSE:CUDA) to get a better sense of its popularity.

Now, we’re going to analyze the latest action regarding Endologix, Inc. (NASDAQ:ELGX).

How are hedge funds trading Endologix, Inc. (NASDAQ:ELGX)?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Tamarack Capital Management, managed by Justin John Ferayorni, holds the biggest position in Endologix, Inc. (NASDAQ:ELGX). Tamarack Capital Management has a $49.7 million position in the stock, comprising 5.9% of its 13F portfolio. Coming in second is James E. Flynn of Deerfield Management, with a $28.8 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Israel Englander’s Millennium Management, Eric Bannasch’s Cadian Capital and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

As aggregate interest increased, some big names have been driving this bullishness. Bridger Management, managed by Roberto Mignone, created the biggest position in Endologix, Inc. (NASDAQ:ELGX). Bridger Management had $8.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $7 million investment in the stock during the quarter. The other funds with new positions in the stock are James Dondero’s Highland Capital Management, Jacob Gottlieb’s Visium Asset Management, and Efrem Kamen’s Pura Vida Investments.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Endologix, Inc. (NASDAQ:ELGX) but similarly valued. These stocks are Teekay Tankers Ltd. (NYSE:TNK), Rentrak Corporation (NASDAQ:RENT), Barracuda Networks Inc (NYSE:CUDA), and Erin Energy Corp (NYSEMKT:ERN). This group of stocks’ market valuations are closest to ELGX’s market valuation.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $185 million in ELGX’s case. Teekay Tankers Ltd. (NYSE:TNK) is the most popular stock in this table. On the other hand Erin Energy Corp (NYSEMKT:ERN) is the least popular one with only 5 bullish hedge fund positions. Along with TNK, Endologix, Inc. (NASDAQ:ELGX) is among the most popular stocks in this group and that makes it worth a closer look.