It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like SeaSpine Holdings Corp (NASDAQ:SPNE).
SeaSpine Holdings Corp (NASDAQ:SPNE) has seen a decrease in enthusiasm from smart money recently. In this way, there were 9 hedge funds in our database with SPNE holdings at the end of the third quarter. At the end of this article we will also compare SPNE to other stocks including Rick’s Cabaret Int’l, Inc (NASDAQ:RICK), Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS), and Exeter Resource Corp. (NYSEAMEX:XRA) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in SeaSpine Holdings Corp (NASDAQ:SPNE)
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, down by 31% from the second quarter of 2016. By comparison, 13 hedge funds held shares or bullish call options in SPNE heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Kevin Kotler’s Broadfin Capital has the largest position in SeaSpine Holdings Corp (NASDAQ:SPNE), worth close to $11.1 million, comprising 1% of its total 13F portfolio. The second most bullish fund manager is Phill Gross and Robert Atchinson’s Adage Capital Management which holds a $10.6 million position. Some other members of the smart money that are bullish consist of Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Michael Kaufman’s MAK Capital One and David Brown’s Hawk Ridge Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Since SeaSpine Holdings Corp (NASDAQ:SPNE) has weathered falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers that elected to cut their full holdings last quarter. It’s worth mentioning that Ken Fisher’s Fisher Asset Management dumped the largest investment of the “upper crust” of funds studied by Insider Monkey, worth an estimated $1.8 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $0.3 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SeaSpine Holdings Corp (NASDAQ:SPNE) but similarly valued. These stocks are Rick’s Cabaret Int’l, Inc (NASDAQ:RICK), Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS), Exeter Resource Corp. (NYSEAMEX:XRA), and BRT Realty Trust (NYSE:BRT). This group of stocks’ market values resemble SPNE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RICK | 3 | 4451 | -1 |
| SHOS | 11 | 45403 | -2 |
| XRA | 4 | 16543 | 0 |
| BRT | 4 | 12920 | 0 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $45 million in SPNE’s case. Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS) is the most popular stock in this table. On the other hand Rick’s Cabaret Int’l, Inc (NASDAQ:RICK) is the least popular one with only 3 bullish hedge fund positions. SeaSpine Holdings Corp (NASDAQ:SPNE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SHOS might be a better candidate to consider taking a long position in.
Disclosure: None
