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 ViewRay, Inc. (NASDAQ:VRAY).
Is VRAY a good stock to buy now? ViewRay, Inc. (NASDAQ:VRAY) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 23. VRAY investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 12 hedge funds in our database with VRAY holdings at the end of June. Our calculations also showed that VRAY 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.
In the financial world there are several formulas stock market investors can use to value stocks. Some of the most under-the-radar formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best investment managers can beat the broader indices by a solid margin (see the details here).
Donald Sussman of Paloma Partners
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 let’s take a gander at the recent hedge fund action encompassing ViewRay, Inc. (NASDAQ:VRAY).
Do Hedge Funds Think VRAY Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in VRAY a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ViewRay, Inc. (NASDAQ:VRAY) was held by Hudson Executive Capital, which reported holding $45.6 million worth of stock at the end of September. It was followed by Pura Vida Investments with a $24.4 million position. Other investors bullish on the company included Great Point Partners, Perceptive Advisors, and Royce & Associates. In terms of the portfolio weights assigned to each position Hudson Executive Capital allocated the biggest weight to ViewRay, Inc. (NASDAQ:VRAY), around 4.66% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, earmarking 1.41 percent of its 13F equity portfolio to VRAY.
Because ViewRay, Inc. (NASDAQ:VRAY) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there were a few funds that elected to cut their positions entirely by the end of the third quarter. Interestingly, Ken Greenberg and David Kim’s Ghost Tree Capital sold off the biggest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $0.7 million in stock. Donald Sussman’s fund, Paloma Partners, also said goodbye to its stock, about $0.1 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to ViewRay, Inc. (NASDAQ:VRAY). We will take a look at Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX), 111, Inc. (NASDAQ:YI), AMC Entertainment Holdings Inc (NYSE:AMC), Banco BBVA Argentina S.A. (NYSE:BBAR), Clovis Oncology Inc (NASDAQ:CLVS), Nautilus, Inc. (NYSE:NLS), and Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA). This group of stocks’ market valuations resemble VRAY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRNX | 15 | 209097 | -3 |
| YI | 4 | 7523 | 0 |
| AMC | 12 | 7804 | 4 |
| BBAR | 3 | 2782 | -5 |
| CLVS | 15 | 69500 | -3 |
| NLS | 17 | 86762 | 5 |
| LOMA | 9 | 37079 | -2 |
| Average | 10.7 | 60078 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $109 million in VRAY’s case. Nautilus, Inc. (NYSE:NLS) is the most popular stock in this table. On the other hand Banco BBVA Argentina S.A. (NYSE:BBAR) is the least popular one with only 3 bullish hedge fund positions. ViewRay, Inc. (NASDAQ:VRAY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRAY is 46.9. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on VRAY as the stock returned 13.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
