Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and a 20% drop in stock prices. Things completely reversed in 2019 and stock indices hit record highs. Recent hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Endologix, Inc. (NASDAQ:ELGX) to find out whether it was one of their high conviction long-term ideas.
Endologix, Inc. (NASDAQ:ELGX) has seen a decrease in hedge fund interest recently. ELGX was in 5 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with ELGX holdings at the end of the previous quarter. Our calculations also showed that ELGX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a large number of gauges market participants put to use to appraise publicly traded companies. A duo of the most underrated gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the market by a solid margin (see the details here).
David E. Shaw of D.E. Shaw
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to view the latest hedge fund action surrounding Endologix, Inc. (NASDAQ:ELGX).
How are hedge funds trading Endologix, Inc. (NASDAQ:ELGX)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in ELGX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Endologix, Inc. (NASDAQ:ELGX) was held by Renaissance Technologies, which reported holding $2.8 million worth of stock at the end of September. It was followed by Partner Fund Management with a $1 million position. Other investors bullish on the company included Millennium Management, Redmile Group, and D E Shaw. In terms of the portfolio weights assigned to each position Partner Fund Management allocated the biggest weight to Endologix, Inc. (NASDAQ:ELGX), around 0.03% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to ELGX.
Since Endologix, Inc. (NASDAQ:ELGX) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there were a few hedge funds who were dropping their full holdings in the third quarter. Intriguingly, Constantinos J. Christofilis’s Archon Capital Management dropped the largest investment of all the hedgies tracked by Insider Monkey, worth an estimated $1.6 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $0.3 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Endologix, Inc. (NASDAQ:ELGX). These stocks are Agile Therapeutics Inc (NASDAQ:AGRX), Navios Maritime Containers L.P. (NASDAQ:NMCI), Western Copper and Gold Corporation (NYSE:WRN), and USA Truck, Inc. (NASDAQ:USAK). This group of stocks’ market valuations match ELGX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGRX | 10 | 21190 | 5 |
| NMCI | 3 | 11248 | 0 |
| WRN | 4 | 330 | 2 |
| USAK | 6 | 3579 | -5 |
| Average | 5.75 | 9087 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $5 million in ELGX’s case. Agile Therapeutics Inc (NASDAQ:AGRX) is the most popular stock in this table. On the other hand Navios Maritime Containers L.P. (NASDAQ:NMCI) is the least popular one with only 3 bullish hedge fund positions. Endologix, Inc. (NASDAQ:ELGX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ELGX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ELGX investors were disappointed as the stock returned -34.5% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
