Hedge Funds Are Selling Radius Health Inc (RDUS)

In this article you are going to find out whether hedge funds think Radius Health Inc (NASDAQ:RDUS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Radius Health Inc (NASDAQ:RDUS) the right pick for your portfolio? Prominent investors were becoming less hopeful. The number of bullish hedge fund positions fell by 2 lately. Radius Health Inc (NASDAQ:RDUS) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic is 24. Our calculations also showed that RDUS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Henrik Rhenman of Rhenman & Partners Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this stock pitch. We go through lists like the 10 best growth stocks to buy 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 we’re going to take a gander at the recent hedge fund action surrounding Radius Health Inc (NASDAQ:RDUS).

Do Hedge Funds Think RDUS Is A Good Stock To Buy Now?

At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in RDUS a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Angelo Gordon & Co held the most valuable stake in Radius Health Inc (NASDAQ:RDUS), which was worth $62.5 million at the end of the second quarter. On the second spot was Farallon Capital which amassed $38.4 million worth of shares. Camber Capital Management, Rubric Capital Management, and Rhenman & Partners Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Angelo Gordon & Co allocated the biggest weight to Radius Health Inc (NASDAQ:RDUS), around 3.19% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, designating 1.09 percent of its 13F equity portfolio to RDUS.

Judging by the fact that Radius Health Inc (NASDAQ:RDUS) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that decided to sell off their full holdings last quarter. Interestingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors said goodbye to the largest investment of the 750 funds followed by Insider Monkey, valued at close to $0.6 million in stock, and Parvinder Thiara’s Athanor Capital was right behind this move, as the fund said goodbye to about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Radius Health Inc (NASDAQ:RDUS). We will take a look at Harmonic Inc (NASDAQ:HLIT), Annexon, Inc. (NASDAQ:ANNX), Helix Energy Solutions Group Inc. (NYSE:HLX), Trillium Therapeutics Inc. (NASDAQ:TRIL), Associated Capital Group, Inc. (NYSE:AC), U.S. Silica Holdings Inc (NYSE:SLCA), and Sutro Biopharma, Inc. (NASDAQ:STRO). This group of stocks’ market valuations match RDUS’s market valuation.

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As you can see these stocks had an average of 15.7 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $191 million in RDUS’s case. Sutro Biopharma, Inc. (NASDAQ:STRO) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 4 bullish hedge fund positions. Radius Health Inc (NASDAQ:RDUS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RDUS is 60.8. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on RDUS as the stock returned 10.2% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.