While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding CRH Medical Corporation (NYSE:CRHM).
Is CRH Medical (NYSE:CRHM) a buy right now? Prominent investors were selling. The number of long hedge fund positions were cut by 1 recently. CRH Medical Corporation (NYSE:CRHM) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. Our calculations also showed that CRHM 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). There were 7 hedge funds in our database with CRHM holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a multitude of metrics investors use to size up publicly traded companies. A pair of the best metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the market by a significant amount (see the details here).
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 15 best blue chip stocks 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. Now we’re going to take a peek at the fresh hedge fund action encompassing CRH Medical Corporation (NYSE:CRHM).
How are hedge funds trading CRH Medical Corporation (NYSE:CRHM)?
At third quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the second quarter of 2020. On the other hand, there were a total of 6 hedge funds with a bullish position in CRHM a year ago. So, let’s check out 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, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the number one position in CRH Medical Corporation (NYSE:CRHM), worth close to $14.7 million, corresponding to 0.4% of its total 13F portfolio. The second most bullish fund of Renaissance Technologies, with a $2.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Alexander Medina Seaver’s Stadium Capital Management, Chuck Royce’s Royce & Associates and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Stadium Capital Management allocated the biggest weight to CRH Medical Corporation (NYSE:CRHM), around 0.64% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, dishing out 0.45 percent of its 13F equity portfolio to CRHM.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Two Sigma Advisors. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified CRHM as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as CRH Medical Corporation (NYSE:CRHM) but similarly valued. We will take a look at Zosano Pharma Corp (NASDAQ:ZSAN), Chimerix Inc (NASDAQ:CMRX), Central Valley Community Bancorp (NASDAQ:CVCY), Smith Micro Software, Inc. (NASDAQ:SMSI), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Ames National Corporation (NASDAQ:ATLO), and Steel Partners Holdings LP (NYSE:SPLP). This group of stocks’ market valuations are similar to CRHM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZSAN | 5 | 3474 | 2 |
| CMRX | 14 | 27330 | 1 |
| CVCY | 3 | 3500 | -2 |
| SMSI | 5 | 2208 | -2 |
| LXRX | 9 | 7434 | -2 |
| ATLO | 4 | 9694 | 1 |
| SPLP | 4 | 12895 | 1 |
| Average | 6.3 | 9505 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $20 million in CRHM’s case. Chimerix Inc (NASDAQ:CMRX) is the most popular stock in this table. On the other hand Central Valley Community Bancorp (NASDAQ:CVCY) is the least popular one with only 3 bullish hedge fund positions. CRH Medical Corporation (NYSE:CRHM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CRHM is 37.6. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on CRHM as the stock returned 34.1% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
