It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Bovie Medical Corporation (NYSEMKT:BVX).
Hedge fund interest in Bovie Medical Corporation (NYSEMKT:BVX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BVX to other stocks including A M Castle and Co (NYSE:CAS), BIOLASE Inc (NASDAQ:BIOL), and FX Energy, Inc. (NASDAQ:FXEN) to get a better sense of its popularity.
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With all of this in mind, we’re going to take a glance at the recent action regarding Bovie Medical Corporation (NYSEMKT:BVX).
How have hedgies been trading Bovie Medical Corporation (NYSEMKT:BVX)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Jeffrey Jay and David Kroin’s Great Point Partners has the biggest position in Bovie Medical Corporation (NYSEMKT:BVX), worth close to $5.2 million, accounting for 2.1% of its total 13F portfolio. Coming in second is Kevin Kotler of Broadfin Capital, with a $1.8 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism comprise James E. Flynn’s Deerfield Management, Joseph Edelman’s Perceptive Advisors and Israel Englander’s Millennium Management.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Bovie Medical Corporation (NYSEMKT:BVX) but similarly valued. These stocks are A M Castle and Co (NYSE:CAS), BIOLASE Inc (NASDAQ:BIOL), FX Energy, Inc. (NASDAQ:FXEN), and Golden Star Resources Ltd. (USA) (NYSEMKT:GSS). This group of stocks’ market valuations match BVX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAS | 7 | 17502 | -6 |
| BIOL | 8 | 9259 | -1 |
| FXEN | 5 | 1981 | -1 |
| GSS | 4 | 1654 | -1 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $9 million in BVX’s case. BIOLASE Inc (NASDAQ:BIOL) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (USA) (NYSEMKT:GSS) is the least popular one with only 4 bullish hedge fund positions. Bovie Medical Corporation (NYSEMKT:BVX) 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 BIOL might be a better candidate to consider a long position.
