Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Sientra Inc (NASDAQ:SIEN).
Sientra Inc (NASDAQ:SIEN) was in 9 hedge funds’ portfolios at the end of the first quarter of 2020. SIEN has experienced a decrease in enthusiasm from smart money lately. There were 15 hedge funds in our database with SIEN holdings at the end of the previous quarter. Our calculations also showed that SIEN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
James E. Flynn of Deerfield Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the new hedge fund action encompassing Sientra Inc (NASDAQ:SIEN).
What have hedge funds been doing with Sientra Inc (NASDAQ:SIEN)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in SIEN over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Sientra Inc (NASDAQ:SIEN) was held by Deerfield Management, which reported holding $8.4 million worth of stock at the end of September. It was followed by Polar Capital with a $5.5 million position. Other investors bullish on the company included Millennium Management, Granite Point Capital, and Granite Point Capital. In terms of the portfolio weights assigned to each position Granite Point Capital allocated the biggest weight to Sientra Inc (NASDAQ:SIEN), around 1.08% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, dishing out 0.27 percent of its 13F equity portfolio to SIEN.
Due to the fact that Sientra Inc (NASDAQ:SIEN) has experienced bearish sentiment from the smart money, we can see that there is a sect of funds that elected to cut their full holdings last quarter. At the top of the heap, Kevin Kotler’s Broadfin Capital cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling about $11.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $4.5 million worth. These moves are interesting, as total hedge fund interest was cut by 6 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sientra Inc (NASDAQ:SIEN) but similarly valued. We will take a look at LSI Industries, Inc. (NASDAQ:LYTS), StoneMor Inc. (NYSE:STON), Kura Sushi USA, Inc. (NASDAQ:KRUS), and First United Corp (NASDAQ:FUNC). This group of stocks’ market values match SIEN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYTS | 11 | 15848 | -3 |
| STON | 3 | 61615 | 0 |
| KRUS | 5 | 17006 | -3 |
| FUNC | 4 | 5848 | -4 |
| Average | 5.75 | 25079 | -2.5 |
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 $25 million. That figure was $20 million in SIEN’s case. LSI Industries, Inc. (NASDAQ:LYTS) is the most popular stock in this table. On the other hand StoneMor Inc. (NYSE:STON) is the least popular one with only 3 bullish hedge fund positions. Sientra Inc (NASDAQ:SIEN) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on SIEN as the stock returned 106% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Sientra Inc. (NASDAQ:SIEN)
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Disclosure: None. This article was originally published at Insider Monkey.
