The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Neovasc Inc. (NASDAQ:NVCN) based on those filings.
Is Neovasc Inc. (NASDAQ:NVCN) ready to rally soon? Money managers are buying. The number of long hedge fund bets rose by 1 lately. Our calculations also showed that NVCN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). NVCN was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. There were 2 hedge funds in our database with NVCN holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Overdeck of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the new hedge fund action regarding Neovasc Inc. (NASDAQ:NVCN).
What does smart money think about Neovasc Inc. (NASDAQ:NVCN)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NVCN over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Alec Litowitz and Ross Laser’s Magnetar Capital has the largest position in Neovasc Inc. (NASDAQ:NVCN), worth close to $0.7 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is John Overdeck and David Siegel of Two Sigma Advisors, with a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Magnetar Capital allocated the biggest weight to Neovasc Inc. (NASDAQ:NVCN), around 0.02% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, earmarking 0.0002 percent of its 13F equity portfolio to NVCN.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the biggest position in Neovasc Inc. (NASDAQ:NVCN). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Neovasc Inc. (NASDAQ:NVCN) but similarly valued. We will take a look at SCWorx Corp. (NASDAQ:WORX), Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), Transenterix Inc (NYSE:TRXC), and iMedia Brands, Inc. (NASDAQ:IMBI). This group of stocks’ market valuations are similar to NVCN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WORX | 1 | 48 | 0 |
| EKSO | 2 | 2231 | -3 |
| TRXC | 5 | 1061 | 0 |
| IMBI | 2 | 665 | -1 |
| Average | 2.5 | 1001 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in NVCN’s case. Transenterix Inc (NYSE:TRXC) is the most popular stock in this table. On the other hand SCWorx Corp. (NASDAQ:WORX) is the least popular one with only 1 bullish hedge fund positions. Neovasc Inc. (NASDAQ:NVCN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on NVCN as the stock returned 85.6% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.