We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Luminex Corporation (NASDAQ:LMNX).
Luminex Corporation (NASDAQ:LMNX) investors should be aware of a decrease in hedge fund interest of late. Our calculations also showed that LMNX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are many metrics shareholders employ to analyze publicly traded companies. A duo of the most innovative metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a superb margin (see the details here).
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the key hedge fund action encompassing Luminex Corporation (NASDAQ:LMNX).
What does smart money think about Luminex Corporation (NASDAQ:LMNX)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LMNX over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Robert G. Moses’s RGM Capital has the most valuable position in Luminex Corporation (NASDAQ:LMNX), worth close to $69.4 million, accounting for 4.6% of its total 13F portfolio. Coming in second is Renaissance Technologies which holds a $45.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism contain David E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Luminex Corporation (NASDAQ:LMNX), around 4.62% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, designating 1.58 percent of its 13F equity portfolio to LMNX.
Judging by the fact that Luminex Corporation (NASDAQ:LMNX) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that elected to cut their full holdings heading into Q4. Interestingly, Noam Gottesman’s GLG Partners said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, totaling close to $1.6 million in stock, and Minhua Zhang’s Weld Capital Management was right behind this move, as the fund said goodbye to about $0.5 million worth. These moves are important to note, as total hedge fund interest dropped by 3 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Luminex Corporation (NASDAQ:LMNX) but similarly valued. These stocks are Intrexon Corporation (NASDAQ:XON), Palomar Holdings, Inc. (NASDAQ:PLMR), American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), and GasLog Partners LP (NYSE:GLOP). This group of stocks’ market values are closest to LMNX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XON | 12 | 61604 | 2 |
| PLMR | 13 | 52613 | 5 |
| AXL | 20 | 80795 | 0 |
| GLOP | 6 | 15286 | 1 |
| Average | 12.75 | 52575 | 2 |
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 $53 million. That figure was $152 million in LMNX’s case. American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) is the most popular stock in this table. On the other hand GasLog Partners LP (NYSE:GLOP) is the least popular one with only 6 bullish hedge fund positions. Luminex Corporation (NASDAQ:LMNX) 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 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 LMNX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LMNX were disappointed as the stock returned 2.3% during the fourth quarter (through the end of November) 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.
