Here is What Hedge Funds Think About Avinger Inc (AVGR)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Avinger Inc (NASDAQ:AVGR).

Avinger Inc (NASDAQ:AVGR) investors should pay attention to an increase in support from the world’s most elite money managers recently. Avinger Inc (NASDAQ:AVGR) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 6. There were 2 hedge funds in our database with AVGR positions at the end of the fourth quarter. Our calculations also showed that AVGR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 S&P 500 ETFs by 115 percentage points since March 2017 (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.

John Overdeck of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the recent hedge fund action regarding Avinger Inc (NASDAQ:AVGR).

Do Hedge Funds Think AVGR Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in AVGR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Avinger Inc (NASDAQ:AVGR) was held by Millennium Management, which reported holding $0.7 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $0.1 million position. The only other hedge fund that is bullish on the company was Two Sigma Advisors.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Avinger Inc (NASDAQ:AVGR) headfirst. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in Avinger Inc (NASDAQ:AVGR). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Avinger Inc (NASDAQ:AVGR) but similarly valued. These stocks are Summit Midstream Partners LP (NYSE:SMLP), Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL), Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), Ayala Pharmaceuticals, Inc. (NASDAQ:AYLA), Apollo Endosurgery, Inc. (NASDAQ:APEN), Yatra Online, Inc. (NASDAQ:YTRA), and Safeguard Scientifics, Inc (NYSE:SFE). This group of stocks’ market valuations resemble AVGR’s market valuation.

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As you can see these stocks had an average of 6.7 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $1 million in AVGR’s case. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. Avinger Inc (NASDAQ:AVGR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AVGR is 28.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately AVGR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AVGR investors were disappointed as the stock returned -23.8% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

Disclosure: None. This article was originally published at Insider Monkey.