Should You Avoid Transenterix Inc (TRXC)?

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 Transenterix Inc (NYSEMKT:TRXC).

Is Transenterix Inc (NYSEMKT:TRXC) a buy, sell, or hold? Investors who are in the know are selling. The number of bullish hedge fund positions shrunk by 3 lately. TRXC was in 10 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with TRXC holdings at the end of the previous quarter. At the end of this article we will also compare TRXC to other stocks including POZEN Inc. (NASDAQ:POZN), TransGlobe Energy Corporation (USA) (NASDAQ:TGA), and Primo Water Corporation (NASDAQ:PRMW) to get a better sense of its popularity.

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Now, we’re going to check out the key action regarding Transenterix Inc (NYSEMKT:TRXC).

What have hedge funds been doing with Transenterix Inc (NYSEMKT:TRXC)?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Aisling Capital, managed by Dennis Purcell, holds the biggest position in Transenterix Inc (NYSEMKT:TRXC). Aisling Capital has a $18.8 million position in the stock, comprising 3.3% of its 13F portfolio. Sitting at the No. 2 spot is Stepstone Group, led by Jose Fernandez, holding a $7.9 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Mike Masters’ Masters Capital Management, Ken Griffin’s Citadel Investment Group and Joseph Edelman’s Perceptive Advisors.

Judging by the fact that Transenterix Inc (NYSEMKT:TRXC) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers who sold off their full holdings last quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $1.1 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Transenterix Inc (NYSEMKT:TRXC). We will take a look at POZEN Inc. (NASDAQ:POZN), TransGlobe Energy Corporation (USA) (NASDAQ:TGA), Primo Water Corporation (NASDAQ:PRMW), and Inotek Pharmaceuticals Corp (NASDAQ:ITEK). This group of stocks’ market valuations are closest to TRXC’s market valuation.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $50 million in TRXC’s case. POZEN Inc. (NASDAQ:POZN) is the most popular stock in this table. On the other hand TransGlobe Energy Corporation (USA) (NASDAQ:TGA) is the least popular one with only 5 bullish hedge fund positions. Transenterix Inc (NYSEMKT:TRXC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard POZN might be a better candidate to consider a long position.