Is TherapeuticsMD Inc (NASDAQ:TXMD) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is TherapeuticsMD Inc (NASDAQ:TXMD) a buy right now? Money managers are getting more optimistic. The number of bullish hedge fund positions moved up by 6 lately. Our calculations also showed that TXMD isn’t among the 30 most popular stocks among hedge funds. TXMD was in 14 hedge funds’ portfolios at the end of the third quarter of 2018. There were 8 hedge funds in our database with TXMD positions at the end of the previous quarter.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a gander at the latest hedge fund action surrounding TherapeuticsMD Inc (NASDAQ:TXMD).
What does the smart money think about TherapeuticsMD Inc (NASDAQ:TXMD)?
Heading into the fourth quarter of 2018, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 75% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TXMD over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Daruma Asset Management held the most valuable stake in TherapeuticsMD Inc (NASDAQ:TXMD), which was worth $29.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $13.1 million worth of shares. Moreover, Perceptive Advisors, Nexthera Capital, and Ardsley Partners were also bullish on TherapeuticsMD Inc (NASDAQ:TXMD), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Daruma Asset Management, managed by Mariko Gordon, created the most valuable position in TherapeuticsMD Inc (NASDAQ:TXMD). Daruma Asset Management had $29.8 million invested in the company at the end of the quarter. Joseph Edelman’s Perceptive Advisors also made a $9.8 million investment in the stock during the quarter. The following funds were also among the new TXMD investors: Ori Hershkovitz’s Nexthera Capital, Israel Englander’s Millennium Management, and Malcolm Fairbairn’s Ascend Capital.
Let’s now review hedge fund activity in other stocks similar to TherapeuticsMD Inc (NASDAQ:TXMD). These stocks are TiVo Corporation (NASDAQ:TIVO), EnPro Industries, Inc. (NYSE:NPO), Inovalon Holdings Inc (NASDAQ:INOV), and Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS). This group of stocks’ market valuations are closest to TXMD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TIVO | 18 | 111313 | 1 |
| NPO | 16 | 137214 | 6 |
| INOV | 13 | 23987 | 1 |
| KTOS | 13 | 132648 | 1 |
| Average | 15 | 101291 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $76 million in TXMD’s case. TiVo Corporation (NASDAQ:TIVO) is the most popular stock in this table. On the other hand Inovalon Holdings Inc (NASDAQ:INOV) is the least popular one with only 13 bullish hedge fund positions. TherapeuticsMD Inc (NASDAQ:TXMD) 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. In this regard TIVO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
