In this article we are going to use hedge fund sentiment as a tool and determine whether Medigus Ltd. (NASDAQ:MDGS) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Medigus Ltd. (NASDAQ:MDGS) investors should be aware of an increase in hedge fund interest of late. Medigus Ltd. (NASDAQ:MDGS) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 3 hedge funds in our database with MDGS positions at the end of the second quarter. Our calculations also showed that MDGS 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
Ken Griffin of Citadel Investment Group
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. Now we’re going to view the fresh hedge fund action surrounding Medigus Ltd. (NASDAQ:MDGS).
How have hedgies been trading Medigus Ltd. (NASDAQ:MDGS)?
At the end of September, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in MDGS over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Armistice Capital, managed by Steven Boyd, holds the most valuable position in Medigus Ltd. (NASDAQ:MDGS). Armistice Capital has a $0.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Hal Mintz’s Sabby Capital, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Medigus Ltd. (NASDAQ:MDGS), around 0.02% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to MDGS.
As one would reasonably expect, some big names have jumped into Medigus Ltd. (NASDAQ:MDGS) headfirst. Armistice Capital, managed by Steven Boyd, initiated the most outsized position in Medigus Ltd. (NASDAQ:MDGS). Armistice Capital had $0.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.1 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Medigus Ltd. (NASDAQ:MDGS). These stocks are InspireMD Inc (NYSE:NSPR), B.O.S. Better Online Solutions Ltd. (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), and TSR, Inc. (NASDAQ:TSRI). This group of stocks’ market valuations are similar to MDGS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NSPR | 4 | 143 | 1 |
| BOSC | 1 | 386 | 0 |
| SDPI | 2 | 212 | 1 |
| CGIX | 1 | 803 | 0 |
| CREX | 1 | 28 | 0 |
| ARTW | 1 | 108 | 0 |
| TSRI | 1 | 452 | 0 |
| Average | 1.6 | 305 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.6 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $1 million in MDGS’s case. InspireMD Inc (NYSE:NSPR) is the most popular stock in this table. On the other hand B.O.S. Better Online Solutions Ltd. (NASDAQ:BOSC) is the least popular one with only 1 bullish hedge fund positions. Medigus Ltd. (NASDAQ:MDGS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MDGS is 86. 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. Hedge funds were also right about betting on MDGS as the stock returned 113% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Medigus Ltd. (NASDAQ:MDGS)
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Disclosure: None. This article was originally published at Insider Monkey.
