Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is SurModics, Inc. (NASDAQ:SRDX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
SurModics, Inc. (NASDAQ:SRDX) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. Our calculations also showed that SRDX isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a gander at the fresh hedge fund action regarding SurModics, Inc. (NASDAQ:SRDX).
Hedge fund activity in SurModics, Inc. (NASDAQ:SRDX)
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SRDX over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the biggest position in SurModics, Inc. (NASDAQ:SRDX). Renaissance Technologies has a $45.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Douglas T. Granat of Trigran Investments, with a $40 million position; the fund has 6.7% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Judging by the fact that SurModics, Inc. (NASDAQ:SRDX) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their positions entirely last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest position of all the hedgies watched by Insider Monkey, worth an estimated $2.7 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund sold off about $1.6 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to SurModics, Inc. (NASDAQ:SRDX). These stocks are GameStop Corp. (NYSE:GME), Rosetta Stone Inc (NYSE:RST), Antares Pharma Inc (NASDAQ:ATRS), and Precision Drilling Corp (NYSE:PDS). This group of stocks’ market values are closest to SRDX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GME | 27 | 117149 | 0 |
| RST | 12 | 110982 | -7 |
| ATRS | 10 | 32726 | -2 |
| PDS | 8 | 25795 | -8 |
| Average | 14.25 | 71663 | -4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $133 million in SRDX’s case. GameStop Corp. (NYSE:GME) is the most popular stock in this table. On the other hand Precision Drilling Corp (NYSE:PDS) is the least popular one with only 8 bullish hedge fund positions. SurModics, Inc. (NASDAQ:SRDX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on SRDX as the stock returned 6% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
