Were Hedge Funds Right About Orthofix Medical Inc (OFIX)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Orthofix Medical Inc (NASDAQ:OFIX).

Is Orthofix Medical Inc (NASDAQ:OFIX) worth your attention right now? Hedge funds were turning less bullish. The number of long hedge fund positions went down by 2 in recent months. Orthofix Medical Inc (NASDAQ:OFIX) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that OFIX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most market participants, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are more than 8000 funds trading at the moment, We hone in on the masters of this club, about 850 funds. Most estimates calculate that this group of people oversee the lion’s share of the hedge fund industry’s total capital, and by keeping track of their finest equity investments, Insider Monkey has revealed a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind let’s check out the fresh hedge fund action regarding Orthofix Medical Inc (NASDAQ:OFIX).

Do Hedge Funds Think OFIX Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the fourth quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in OFIX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Paradice Investment Management was the largest shareholder of Orthofix Medical Inc (NASDAQ:OFIX), with a stake worth $42.2 million reported as of the end of March. Trailing Paradice Investment Management was Renaissance Technologies, which amassed a stake valued at $27.8 million. Royce & Associates, Point72 Asset Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Paradice Investment Management allocated the biggest weight to Orthofix Medical Inc (NASDAQ:OFIX), around 2.03% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.71 percent of its 13F equity portfolio to OFIX.

Since Orthofix Medical Inc (NASDAQ:OFIX) has faced a decline in interest from hedge fund managers, we can see that there exists a select few money managers who were dropping their positions entirely by the end of the first quarter. At the top of the heap, Michael Castor’s Sio Capital sold off the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $6 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $0.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Orthofix Medical Inc (NASDAQ:OFIX) but similarly valued. These stocks are Westlake Chemical Partners LP (NYSE:WLKP), Veru Inc. (NASDAQ:VERU), Par Pacific Holdings, Inc. (NYSE:PARR), Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), TCR2 Therapeutics Inc. (NASDAQ:TCRR), and The Container Store Group Inc (NYSE:TCS). All of these stocks’ market caps are similar to OFIX’s market cap.

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As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $137 million in OFIX’s case. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is the most popular stock in this table. On the other hand Westlake Chemical Partners LP (NYSE:WLKP) is the least popular one with only 3 bullish hedge fund positions. Orthofix Medical Inc (NASDAQ:OFIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OFIX is 52.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately OFIX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OFIX were disappointed as the stock returned -11.9% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.