In this article you are going to find out whether hedge funds think Akumin Inc. (NASDAQ:AKU) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Akumin Inc. (NASDAQ:AKU) shareholders have witnessed an increase in support from the world’s most elite money managers lately. Akumin Inc. (NASDAQ:AKU) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. AKU is a recent IPO and this is the first quarter we have hedge fund holdings data about this stock. Our calculations also showed that AKU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.Keeping this in mind let’s review the latest hedge fund action regarding Akumin Inc. (NASDAQ:AKU).
What does smart money think about Akumin Inc. (NASDAQ:AKU)?
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3 from the second quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in AKU a year ago. 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, SCW Capital Management, managed by John R. Wagner, holds the largest position in Akumin Inc. (NASDAQ:AKU). SCW Capital Management has a $29.1 million position in the stock, comprising 16.9% of its 13F portfolio. On SCW Capital Management’s heels is Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, which holds a $18.5 million position; the fund has 0.6% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to Akumin Inc. (NASDAQ:AKU), around 16.86% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, designating 0.56 percent of its 13F equity portfolio to AKU.
Consequently, key hedge funds were leading the bulls’ herd. SCW Capital Management, managed by John R. Wagner, created the most valuable position in Akumin Inc. (NASDAQ:AKU). SCW Capital Management had $29.1 million invested in the company at the end of the quarter. Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management also made a $18.5 million investment in the stock during the quarter. The only other fund with a brand new AKU position is Chuck Royce’s Royce & Associates.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Akumin Inc. (NASDAQ:AKU) but similarly valued. We will take a look at Unifi, Inc. (NYSE:UFI), Equity Bancshares, Inc. (NASDAQ:EQBK), Reliant Bancorp, Inc. (NASDAQ:RBNC), Neptune Wellness Solutions Inc (NASDAQ:NEPT), Xunlei Ltd (NASDAQ:XNET), DermTech, Inc. (NASDAQ:DMTK), and Larimar Therapeutics, Inc. (NASDAQ:LRMR). This group of stocks’ market values match AKU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UFI | 12 | 37612 | -4 |
| EQBK | 6 | 12966 | -2 |
| RBNC | 3 | 5493 | 1 |
| NEPT | 5 | 41890 | 3 |
| XNET | 5 | 5302 | 0 |
| DMTK | 6 | 37635 | -1 |
| LRMR | 17 | 167530 | -1 |
| Average | 7.7 | 44061 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.7 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $48 million in AKU’s case. Larimar Therapeutics, Inc. (NASDAQ:LRMR) is the most popular stock in this table. On the other hand Reliant Bancorp, Inc. (NASDAQ:RBNC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Akumin Inc. (NASDAQ:AKU) is even less popular than RBNC. Our overall hedge fund sentiment score for AKU is 8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards AKU. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately AKU wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AKU investors were disappointed as the stock returned 0% since the end of the third quarter (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
