The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Establishment Labs Holdings Inc. (NASDAQ:ESTA)?
Is Establishment Labs Holdings Inc. (NASDAQ:ESTA) undervalued? The best stock pickers are getting more bullish. The number of bullish hedge fund bets rose by 4 lately. Our calculations also showed that ESTA 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 today’s marketplace there are plenty of indicators stock traders can use to grade publicly traded companies. Two of the most useful indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the market by a very impressive amount (see the details here).
Will Harkey of Nantahala Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. 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 let’s take a peek at the recent hedge fund action encompassing Establishment Labs Holdings Inc. (NASDAQ:ESTA).
What does smart money think about Establishment Labs Holdings Inc. (NASDAQ:ESTA)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in ESTA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Nantahala Capital Management held the most valuable stake in Establishment Labs Holdings Inc. (NASDAQ:ESTA), which was worth $27.8 million at the end of the third quarter. On the second spot was Pura Vida Investments which amassed $13.4 million worth of shares. Perceptive Advisors, Magnetar Capital, and Prosight Capital 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 Pura Vida Investments allocated the biggest weight to Establishment Labs Holdings Inc. (NASDAQ:ESTA), around 3.41% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, earmarking 1.06 percent of its 13F equity portfolio to ESTA.
As industrywide interest jumped, key money managers have been driving this bullishness. Prosight Capital, managed by Lawrence Hawkins, established the most outsized position in Establishment Labs Holdings Inc. (NASDAQ:ESTA). Prosight Capital had $1.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.8 million investment in the stock during the quarter. The other funds with brand new ESTA positions are Mark Coe’s Intrinsic Edge Capital, Peter Muller’s PDT Partners, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to Establishment Labs Holdings Inc. (NASDAQ:ESTA). These stocks are Capital City Bank Group, Inc. (NASDAQ:CCBG), DMC Global Inc. (NASDAQ:BOOM), Peapack-Gladstone Financial Corp (NASDAQ:PGC), and Organogenesis Holdings Inc. (NASDAQ:ORGO). This group of stocks’ market valuations are similar to ESTA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCBG | 3 | 6586 | -2 |
| BOOM | 12 | 22475 | -8 |
| PGC | 18 | 36066 | 1 |
| ORGO | 5 | 2903 | -3 |
| Average | 9.5 | 17008 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $65 million in ESTA’s case. Peapack-Gladstone Financial Corp (NASDAQ:PGC) is the most popular stock in this table. On the other hand Capital City Bank Group, Inc. (NASDAQ:CCBG) is the least popular one with only 3 bullish hedge fund positions. Establishment Labs Holdings Inc. (NASDAQ:ESTA) 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. 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately ESTA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ESTA were disappointed as the stock returned 18.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Establishment Labs Holdings Inc.
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Disclosure: None. This article was originally published at Insider Monkey.
