Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about InspireMD Inc (NYSE:NSPR).
Is InspireMD Inc (NYSE:NSPR) a bargain? Money managers were getting more optimistic. The number of bullish hedge fund positions rose by 1 lately. InspireMD Inc (NYSE:NSPR) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 6. Our calculations also showed that NSPR 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 3 hedge funds in our database with NSPR positions at the end of the second 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
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. With all of this in mind let’s review the latest hedge fund action surrounding InspireMD Inc (NYSE:NSPR).
Hedge fund activity in InspireMD Inc (NYSE:NSPR)
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the second quarter of 2020. By comparison, 1 hedge funds held shares or bullish call options in NSPR a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Hal Mintz’s Sabby Capital has the biggest position in InspireMD Inc (NYSE:NSPR), worth close to $0.1 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism encompass Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to InspireMD Inc (NYSE:NSPR), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0 percent of its 13F equity portfolio to NSPR.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the most outsized position in InspireMD Inc (NYSE:NSPR). Two Sigma Advisors had $0 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as InspireMD Inc (NYSE:NSPR) but similarly valued. These stocks are B.O.S. Better Online Solutions (NASDAQ:BOSC), Superior Drilling Products, Inc. (NYSE:SDPI), Cancer Genetics Inc (NASDAQ:CGIX), Creative Realities, Inc. (NASDAQ:CREX), Art’s-Way Manufacturing Co., Inc. (NASDAQ:ARTW), TSR, Inc. (NASDAQ:TSRI), and Seneca Biopharma, Inc. (NASDAQ:SNCA). All of these stocks’ market caps are similar to NSPR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BOSC | 1 | 386 | 0 |
| SDPI | 2 | 212 | 1 |
| CGIX | 1 | 803 | 0 |
| CREX | 1 | 28 | 0 |
| ARTW | 1 | 108 | 0 |
| TSRI | 1 | 452 | 0 |
| SNCA | 2 | 381 | 0 |
| Average | 1.3 | 339 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.3 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $0 million in NSPR’s case. Superior Drilling Products, Inc. (NYSE:SDPI) is the most popular stock in this table. On the other hand B.O.S. Better Online Solutions (NASDAQ:BOSC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks InspireMD Inc (NYSE:NSPR) is more popular among hedge funds. Our overall hedge fund sentiment score for NSPR is 76. 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 returned 30.7% in 2020 through November 27th but still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on NSPR as the stock returned 12.5% since the end of September (through 11/27) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.