The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Pro-Dex, Inc. (NASDAQ:PDEX).
Hedge fund interest in Pro-Dex, Inc. (NASDAQ:PDEX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PDEX to other stocks including Tottenham Acquisition I Limited (NASDAQ:TOTA), Obsidian Energy Ltd. (NYSE:OBE), and FreightCar America, Inc. (NASDAQ:RAIL) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Louis Navellier of Navellier & Associates
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 take a peek at the new hedge fund action encompassing Pro-Dex, Inc. (NASDAQ:PDEX).
What have hedge funds been doing with Pro-Dex, Inc. (NASDAQ:PDEX)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 1 hedge funds with a bullish position in PDEX a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the biggest position in Pro-Dex, Inc. (NASDAQ:PDEX). Renaissance Technologies has a $0.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Navellier & Associates, managed by Louis Navellier, which holds a $0.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish consist of Paul Marshall and Ian Wace’s Marshall Wace, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and . In terms of the portfolio weights assigned to each position Navellier & Associates allocated the biggest weight to Pro-Dex, Inc. (NASDAQ:PDEX), around 0.05% of its 13F portfolio. Springbok Capital is also relatively very bullish on the stock, dishing out 0.0024 percent of its 13F equity portfolio to PDEX.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks similar to Pro-Dex, Inc. (NASDAQ:PDEX). These stocks are Tottenham Acquisition I Limited (NASDAQ:TOTA), Obsidian Energy Ltd. (NYSE:OBE), FreightCar America, Inc. (NASDAQ:RAIL), and Home Federal Bancorp Inc of Louisiana (NASDAQ:HFBL). This group of stocks’ market values resemble PDEX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOTA | 5 | 3935 | 0 |
| OBE | 6 | 3998 | -1 |
| RAIL | 10 | 9431 | 1 |
| HFBL | 1 | 2138 | 0 |
| Average | 5.5 | 4876 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $1 million in PDEX’s case. FreightCar America, Inc. (NASDAQ:RAIL) is the most popular stock in this table. On the other hand Home Federal Bancorp Inc of Louisiana (NASDAQ:HFBL) is the least popular one with only 1 bullish hedge fund positions. Pro-Dex, Inc. (NASDAQ:PDEX) 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 PDEX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PDEX investors were disappointed as the stock returned -8% 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.