Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Vapotherm, Inc. (NYSE:VAPO) a superb stock to buy now? The best stock pickers are taking a bullish view. The number of long hedge fund positions moved up by 1 in recent months. Our calculations also showed that VAPO isn’t among the 30 most popular stocks among hedge funds (see the video below). VAPO was in 6 hedge funds’ portfolios at the end of the second quarter of 2019. There were 5 hedge funds in our database with VAPO positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of tools stock market investors have at their disposal to grade stocks. A couple of the less utilized tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top money managers can beat their index-focused peers by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the fresh hedge fund action encompassing Vapotherm, Inc. (NYSE:VAPO).
Hedge fund activity in Vapotherm, Inc. (NYSE:VAPO)
At the end of the second quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VAPO over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Joseph Edelman’s Perceptive Advisors has the number one position in Vapotherm, Inc. (NYSE:VAPO), worth close to $32.3 million, accounting for 0.7% of its total 13F portfolio. The second largest stake is held by Redmile Group, managed by Jeremy Green, which holds a $22.1 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Richard Driehaus’s Driehaus Capital and Efrem Kamen’s Pura Vida Investments.
As aggregate interest increased, key hedge funds have jumped into Vapotherm, Inc. (NYSE:VAPO) headfirst. Millennium Management, managed by Israel Englander, established the most valuable position in Vapotherm, Inc. (NYSE:VAPO). Millennium Management had $0.3 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Vapotherm, Inc. (NYSE:VAPO) but similarly valued. We will take a look at Old Second Bancorp Inc. (NASDAQ:OSBC), Lands’ End, Inc. (NASDAQ:LE), PDL BioPharma Inc. (NASDAQ:PDLI), and Consolidated Communications Holdings Inc (NASDAQ:CNSL). This group of stocks’ market valuations resemble VAPO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OSBC | 12 | 34682 | 0 |
| LE | 12 | 71897 | -2 |
| PDLI | 13 | 66848 | -5 |
| CNSL | 14 | 8843 | 3 |
| Average | 12.75 | 45568 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $87 million in VAPO’s case. Consolidated Communications Holdings Inc (NASDAQ:CNSL) is the most popular stock in this table. On the other hand Old Second Bancorp Inc. (NASDAQ:OSBC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Vapotherm, Inc. (NYSE:VAPO) is even less popular than OSBC. Hedge funds dodged a bullet by taking a bearish stance towards VAPO. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately VAPO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); VAPO investors were disappointed as the stock returned -58.8% during the third 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
