With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Radius Health Inc (NASDAQ:RDUS).
Is RDUS a good stock to buy now? Radius Health Inc (NASDAQ:RDUS) has seen an increase in activity from the world’s largest hedge funds of late. Radius Health Inc (NASDAQ:RDUS) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 24. Our calculations also showed that RDUS 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.
Minhua Zhang of Weld Capital Management
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. With all of this in mind let’s review the key hedge fund action encompassing Radius Health Inc (NASDAQ:RDUS).
Do Hedge Funds Think RDUS Is A Good Stock To Buy Now?
At third quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RDUS over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Farallon Capital has the largest position in Radius Health Inc (NASDAQ:RDUS), worth close to $23.9 million, amounting to 0.2% of its total 13F portfolio. Coming in second is Camber Capital Management, managed by Stephen DuBois, which holds a $23.5 million position; 1.2% of its 13F portfolio is allocated to the company. Remaining peers that are bullish consist of David Rosen’s Rubric Capital Management, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management and Sander Gerber’s Hudson Bay Capital Management. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to Radius Health Inc (NASDAQ:RDUS), around 1.56% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, setting aside 1.34 percent of its 13F equity portfolio to RDUS.
As one would reasonably expect, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the most outsized position in Radius Health Inc (NASDAQ:RDUS). Millennium Management had $3.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $2.1 million position during the quarter. The only other fund with a new position in the stock is Minhua Zhang’s Weld Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Radius Health Inc (NASDAQ:RDUS) but similarly valued. These stocks are Yintech Investment Holdings Limited (NASDAQ:YIN), Mitek Systems, Inc. (NASDAQ:MITK), Universal Electronics Inc (NASDAQ:UEIC), Aptose Biosciences Inc (NASDAQ:APTO), 89bio, Inc. (NASDAQ:ETNB), Nordic American Tankers Ltd (NYSE:NAT), and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN). This group of stocks’ market valuations are similar to RDUS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YIN | 3 | 998 | 2 |
| MITK | 20 | 88835 | 1 |
| UEIC | 10 | 18576 | -1 |
| APTO | 21 | 200892 | 3 |
| ETNB | 20 | 261691 | 14 |
| NAT | 10 | 20214 | 5 |
| SCHN | 13 | 9841 | 2 |
| Average | 13.9 | 85864 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $125 million in RDUS’s case. Aptose Biosciences Inc (NASDAQ:APTO) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Radius Health Inc (NASDAQ:RDUS) is more popular among hedge funds. Our overall hedge fund sentiment score for RDUS is 83.5. 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 December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on RDUS as the stock returned 29.7% since the end of September (through 12/14) 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.
