Palomar Medical Technologies Inc (NASDAQ:PMTI) investors should be aware of an increase in hedge fund interest lately.
To most market participants, hedge funds are seen as underperforming, old investment tools of the past. While there are over 8000 funds trading at the moment, we at Insider Monkey hone in on the top tier of this group, about 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total capital, and by keeping an eye on their top stock picks, we have deciphered a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as integral, bullish insider trading sentiment is another way to break down the world of equities. Just as you’d expect, there are a variety of incentives for a bullish insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this method if “monkeys” understand what to do (learn more here).
Keeping this in mind, it’s important to take a look at the recent action regarding Palomar Medical Technologies Inc (NASDAQ:PMTI).
What does the smart money think about Palomar Medical Technologies Inc (NASDAQ:PMTI)?
At Q1’s end, a total of 11 of the hedge funds we track held long positions in this stock, a change of 83% from the first quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Neal C. Bradsher’s Broadwood Capital had the largest position in Palomar Medical Technologies Inc (NASDAQ:PMTI), worth close to $39.1 million, accounting for 11.4% of its total 13F portfolio. Sitting at the No. 2 spot is Alec Litowitz and Ross Laser of Magnetar Capital, with a $6 million position; 0.2% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Mario Gabelli’s GAMCO Investors, Cliff Asness’s AQR Capital Management and Jim Simons’s Renaissance Technologies.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Magnetar Capital, managed by Alec Litowitz and Ross Laser, assembled the most outsized position in Palomar Medical Technologies Inc (NASDAQ:PMTI). Magnetar Capital had 6 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $2.8 million position during the quarter. The other funds with brand new PMTI positions are Matthew Tewksbury’s Stevens Capital Management, Jean-Marie Eveillard’s First Eagle Investment Management, and Paul Touradji’s TOURADJI CAPITAL MANAGEMENT LP.
How have insiders been trading Palomar Medical Technologies Inc (NASDAQ:PMTI)?
Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last half-year time frame, Palomar Medical Technologies Inc (NASDAQ:PMTI) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Palomar Medical Technologies Inc (NASDAQ:PMTI). These stocks are Accuray Incorporated (NASDAQ:ARAY), PhotoMedex Inc (NASDAQ:PHMD), RTI Biologics Inc. (NASDAQ:RTIX), Navidea Biopharmaceuticals Inc (NYSEAMEX:NAVB), and Exactech, Inc. (NASDAQ:EXAC). This group of stocks are in the medical appliances & equipment industry and their market caps resemble PMTI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Accuray Incorporated (NASDAQ:ARAY) | 17 | 2 | 2 |
| PhotoMedex Inc (NASDAQ:PHMD) | 5 | 0 | 2 |
| RTI Biologics Inc. (NASDAQ:RTIX) | 12 | 0 | 1 |
| Navidea Biopharmaceuticals Inc (NYSEAMEX:NAVB) | 4 | 5 | 0 |
| Exactech, Inc. (NASDAQ:EXAC) | 6 | 0 | 8 |
With the results demonstrated by the aforementioned studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Palomar Medical Technologies Inc (NASDAQ:PMTI) shareholders fit into this picture quite nicely.
