In this article we are going to use hedge fund sentiment as a tool and determine whether Motus GI Holdings, Inc. (NASDAQ:MOTS) 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.
Is MOTS a good stock to buy? Motus GI Holdings, Inc. (NASDAQ:MOTS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of March. Our calculations also showed that MOTS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare MOTS to other stocks including Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC), Hallador Energy Co (NASDAQ:HNRG), and Crown ElectroKinetics Corp. (NASDAQ:CRKN) to get a better sense of its popularity.
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Adam Usdan of Trellus Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to view the key hedge fund action regarding Motus GI Holdings, Inc. (NASDAQ:MOTS).
Do Hedge Funds Think MOTS Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in MOTS a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Perceptive Advisors was the largest shareholder of Motus GI Holdings, Inc. (NASDAQ:MOTS), with a stake worth $2.1 million reported as of the end of March. Trailing Perceptive Advisors was Renaissance Technologies, which amassed a stake valued at $0.6 million. Trellus Management Company, Millennium Management, and ExodusPoint Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Trellus Management Company allocated the biggest weight to Motus GI Holdings, Inc. (NASDAQ:MOTS), around 0.17% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to MOTS.
Judging by the fact that Motus GI Holdings, Inc. (NASDAQ:MOTS) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of hedgies that decided to sell off their positions entirely by the end of the first quarter. Intriguingly, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $0.4 million in stock, and Steven Boyd’s Armistice Capital was right behind this move, as the fund sold off about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Motus GI Holdings, Inc. (NASDAQ:MOTS). These stocks are Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC), Hallador Energy Co (NASDAQ:HNRG), Crown ElectroKinetics Corp. (NASDAQ:CRKN), MEDIROM Healthcare Technologies Inc. (NASDAQ:MRM), Asia Pacific Wire & Cable Corporation Limited (NASDAQ:APWC), Communications Systems, Inc. (NASDAQ:JCS), and Deswell Industries, Inc. (NASDAQ:DSWL). This group of stocks’ market valuations resemble MOTS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CYCC | 8 | 16256 | 4 |
| HNRG | 4 | 4536 | -1 |
| CRKN | 2 | 371 | 2 |
| MRM | 1 | 218 | 1 |
| APWC | 2 | 1076 | 1 |
| JCS | 2 | 8743 | 0 |
| DSWL | 1 | 62 | 0 |
| Average | 2.9 | 4466 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $3 million in MOTS’s case. Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC) is the most popular stock in this table. On the other hand MEDIROM Healthcare Technologies Inc. (NASDAQ:MRM) is the least popular one with only 1 bullish hedge fund positions. Motus GI Holdings, Inc. (NASDAQ:MOTS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MOTS is 58.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately MOTS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MOTS were disappointed as the stock returned -8.3% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Motus Gi Holdings Inc. (NASDAQ:MOTS)
Follow Motus Gi Holdings Inc. (NASDAQ:MOTS)
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Disclosure: None. This article was originally published at Insider Monkey.
