With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was CareCloud, Inc. (NASDAQ:MTBC).
CareCloud, Inc. (NASDAQ:MTBC) investors should pay attention to a decrease in support from the world’s most elite money managers of late. CareCloud, Inc. (NASDAQ:MTBC) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 6. There were 6 hedge funds in our database with MTBC positions at the end of the fourth quarter. Our calculations also showed that MTBC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s view the new hedge fund action regarding CareCloud, Inc. (NASDAQ:MTBC).
Do Hedge Funds Think MTBC Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in MTBC 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.
Of the funds tracked by Insider Monkey, P.A.W. CAPITAL PARTNERS, managed by Peter A. Wright, holds the largest position in CareCloud, Inc. (NASDAQ:MTBC). P.A.W. CAPITAL PARTNERS has a $5.1 million position in the stock, comprising 4.5% of its 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions encompass Renaissance Technologies, Greg Eisner’s Engineers Gate Manager and . In terms of the portfolio weights assigned to each position P.A.W. CAPITAL PARTNERS allocated the biggest weight to CareCloud, Inc. (NASDAQ:MTBC), around 4.46% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to MTBC.
Since CareCloud, Inc. (NASDAQ:MTBC) has faced falling interest from the aggregate hedge fund industry, we can see that there exists a select few fund managers who sold off their full holdings last quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $0.4 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to CareCloud, Inc. (NASDAQ:MTBC). These stocks are Fang Holdings Limited (NYSE:SFUN), Biofrontera AG (NASDAQ:BFRA), Tanzanian Gold Corporation (NYSE:TRX), Armata Pharmaceuticals, Inc. (NYSE:ARMP), JMP Group LLC (NYSE:JMP), Adams Resources & Energy Inc (NYSE:AE), and Qumu Corp (NASDAQ:QUMU). All of these stocks’ market caps resemble MTBC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SFUN | 3 | 4647 | 0 |
| BFRA | 2 | 316 | 2 |
| TRX | 2 | 108 | 0 |
| ARMP | 3 | 768 | 2 |
| JMP | 1 | 1261 | -1 |
| AE | 4 | 10821 | 1 |
| QUMU | 6 | 21007 | 1 |
| Average | 3 | 5561 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $8 million in MTBC’s case. Qumu Corp (NASDAQ:QUMU) is the most popular stock in this table. On the other hand JMP Group LLC (NYSE:JMP) is the least popular one with only 1 bullish hedge fund positions. CareCloud, Inc. (NASDAQ:MTBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTBC is 53. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on MTBC, though not to the same extent, as the stock returned 8.1% since Q1 (through June 11th) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
