Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Syneron Medical Ltd. (NASDAQ:ELOS) was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. ELOS shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. There were 14 hedge funds in our database with ELOS holdings at the end of the previous quarter. At the end of this article we will also compare ELOS to other stocks including Contango Oil & Gas Company (NYSEAMEX:MCF), Scorpio Bulkers Inc (NYSE:SALT), and Franklin Covey Co. (NYSE:FC) to get a better sense of its popularity.
Follow Syneron Medical Ltd. (NASDAQ:ELOS)
Follow Syneron Medical Ltd. (NASDAQ:ELOS)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with Syneron Medical Ltd. (NASDAQ:ELOS)?
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, down by 7% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in ELOS at the beginning of this year. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Richard Mashaal of Rima Senvest Management holds the largest position in Syneron Medical Ltd. (NASDAQ:ELOS) which has a $27.5 million position in the stock, comprising 2% of its 13F portfolio. The second largest stake is held by Conan Laughlin of North Tide Capital, with a $25.1 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Stephen DuBois’ Camber Capital Management, Craig A. Drill’s Craig Drill Capital, and Renaissance Technologies, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace LLP. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified ELOS as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Syneron Medical Ltd. (NASDAQ:ELOS) but similarly valued. We will take a look at Contango Oil & Gas Company (NYSEAMEX:MCF), Scorpio Bulkers Inc (NYSE:SALT), Franklin Covey Co. (NYSE:FC), and Electrum Special Acquisition Corp (NASDAQ:ELECU). All of these stocks’ market caps resemble ELOS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCF | 12 | 62509 | 0 |
| SALT | 9 | 46976 | 0 |
| FC | 8 | 33195 | 2 |
| ELECU | 17 | 107722 | -1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $98 million in ELOS’s case. Electrum Special Acquisition Corp (NASDAQ:ELECU) is the most popular stock in this table. On the other hand Franklin Covey Co. (NYSE:FC) is the least popular one with only 8 bullish hedge fund positions. Syneron Medical Ltd. (NASDAQ:ELOS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ELECU might be a better candidate to consider taking a long position in.
Disclosure: None
