“October lived up to its scary reputation—the S&P 500 falling in the month by the largest amount in the last 40 years, the only worse Octobers being ’08 and the Crash of ’87. For perspective, there have been only 5 occasions in those 40 years when the S&P 500 declined by greater than 20% from peak to trough. Other than the ’87 Crash, all were during recessions. There were 17 other instances, over the same time frame, when the market fell by over 10% but less than 20%. Furthermore, this is the 18th correction of 5% or more since the current bull market started in March ’09. Corrections are the norm. They can be healthy as they often undo market complacency—overbought levels—potentially allowing the market to base and move even higher.” This is how Trapeze Asset Management summarized the recent market moves in its investor letter. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards one of the stocks hedge funds invest in.
ViewRay, Inc. (NASDAQ:VRAY) shareholders have witnessed a decrease in hedge fund interest recently. VRAY was in 21 hedge funds’ portfolios at the end of December. There were 23 hedge funds in our database with VRAY holdings at the end of the previous quarter. Our calculations also showed that VRAY isn’t among the 30 most popular stocks among hedge funds.
To most stock holders, hedge funds are seen as slow, old investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, Our researchers choose to focus on the leaders of this club, approximately 750 funds. Most estimates calculate that this group of people direct the majority of all hedge funds’ total asset base, and by observing their unrivaled picks, Insider Monkey has identified a number of investment strategies that have historically outpaced the market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s view the key hedge fund action encompassing ViewRay, Inc. (NASDAQ:VRAY).
What does the smart money think about ViewRay, Inc. (NASDAQ:VRAY)?
Heading into the first quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VRAY over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ViewRay, Inc. (NASDAQ:VRAY) was held by Puissance Capital Managementá, which reported holding $41.5 million worth of stock at the end of December. It was followed by OrbiMed Advisors with a $31.3 million position. Other investors bullish on the company included Perceptive Advisors, Millennium Management, and Partner Fund Management.
Seeing as ViewRay, Inc. (NASDAQ:VRAY) has faced falling interest from the smart money, it’s safe to say that there is a sect of money managers that elected to cut their positions entirely in the third quarter. Intriguingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dumped the biggest investment of all the hedgies monitored by Insider Monkey, valued at close to $23.6 million in stock, and Warren Lammert’s Granite Point Capital was right behind this move, as the fund dropped about $1.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ViewRay, Inc. (NASDAQ:VRAY) but similarly valued. These stocks are Forestar Group Inc. (NYSE:FOR), Echo Global Logistics, Inc. (NASDAQ:ECHO), Customers Bancorp Inc (NYSE:CUBI), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks’ market values are closest to VRAY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FOR | 6 | 57047 | 1 |
| ECHO | 15 | 24246 | 1 |
| CUBI | 15 | 32362 | 6 |
| ACLS | 9 | 66860 | -4 |
| Average | 11.25 | 45129 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $178 million in VRAY’s case. Echo Global Logistics, Inc. (NASDAQ:ECHO) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks ViewRay, Inc. (NASDAQ:VRAY) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on VRAY, though not to the same extent, as the stock returned 16.8% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
