Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Stratasys, Ltd. (NASDAQ:SSYS) based on that data and determine whether they were really smart about the stock.
Stratasys, Ltd. (NASDAQ:SSYS) investors should be aware of an increase in hedge fund sentiment in recent months. Stratasys, Ltd. (NASDAQ:SSYS) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistics is 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SSYS isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Philippe Laffont of Coatue Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s take a look at the recent hedge fund action regarding Stratasys, Ltd. (NASDAQ:SSYS).
How have hedgies been trading Stratasys, Ltd. (NASDAQ:SSYS)?
At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SSYS over the last 20 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in Stratasys, Ltd. (NASDAQ:SSYS), worth close to $34.1 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Millennium Management, led by Israel Englander, holding a $18 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise Mario Gabelli’s GAMCO Investors, Philippe Laffont’s Coatue Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Stratasys, Ltd. (NASDAQ:SSYS), around 0.1% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to SSYS.
Now, specific money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most valuable position in Stratasys, Ltd. (NASDAQ:SSYS). Arrowstreet Capital had $6.5 million invested in the company at the end of the quarter. Renaissance Technologies also made a $5 million investment in the stock during the quarter. The other funds with brand new SSYS positions are Donald Sussman’s Paloma Partners, Michael Gelband’s ExodusPoint Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now review hedge fund activity in other stocks similar to Stratasys, Ltd. (NASDAQ:SSYS). We will take a look at Newmark Group, Inc. (NASDAQ:NMRK), Transportadora de Gas del Sur SA (NYSE:TGS), Crescent Point Energy Corp (NYSE:CPG), Welbilt, Inc. (NYSE:WBT), American Finance Trust, Inc. (NASDAQ:AFIN), American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), and Precigen, Inc. (NASDAQ:PGEN). This group of stocks’ market values resemble SSYS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NMRK | 24 | 94291 | 0 |
| TGS | 5 | 12707 | -1 |
| CPG | 9 | 12064 | -1 |
| WBT | 22 | 204111 | -3 |
| AFIN | 10 | 12218 | 0 |
| AXL | 20 | 72878 | -2 |
| PGEN | 15 | 53978 | 2 |
| Average | 15 | 66035 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $92 million in SSYS’s case. Newmark Group, Inc. (NASDAQ:NMRK) is the most popular stock in this table. On the other hand Transportadora de Gas del Sur SA (NYSE:TGS) is the least popular one with only 5 bullish hedge fund positions. Stratasys, Ltd. (NASDAQ:SSYS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SSYS is 76.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately SSYS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SSYS were disappointed as the stock returned -21.4% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
