Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Co-Diagnostics, Inc. (NASDAQ:CODX) to find out whether there were any major changes in hedge funds’ views.
Co-Diagnostics, Inc. (NASDAQ:CODX) shareholders have witnessed an increase in support from the world’s most elite money managers recently. Co-Diagnostics, Inc. (NASDAQ:CODX) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CODX 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.
To most market participants, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are more than 8000 funds trading today, Our researchers hone in on the top tier of this group, around 850 funds. Most estimates calculate that this group of people watch over the lion’s share of the smart money’s total asset base, and by tracking their inimitable investments, Insider Monkey has found a number of investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Michael Gelband of ExodusPoint Capital
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. Keeping this in mind let’s take a glance at the key hedge fund action regarding Co-Diagnostics, Inc. (NASDAQ:CODX).
What does smart money think about Co-Diagnostics, Inc. (NASDAQ:CODX)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 1 hedge funds with a bullish position in CODX a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Co-Diagnostics, Inc. (NASDAQ:CODX) was held by Citadel Investment Group, which reported holding $2.1 million worth of stock at the end of September. It was followed by AQR Capital Management with a $1.1 million position. Other investors bullish on the company included Millennium Management, ExodusPoint Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to Co-Diagnostics, Inc. (NASDAQ:CODX), around 0.01% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to CODX.
Consequently, some big names have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, created the most valuable position in Co-Diagnostics, Inc. (NASDAQ:CODX). AQR Capital Management had $1.1 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.2 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Co-Diagnostics, Inc. (NASDAQ:CODX) but similarly valued. These stocks are Peoples Bancorp Inc. (NASDAQ:PEBO), Heidrick & Struggles International, Inc. (NASDAQ:HSII), Donegal Group, Inc. (NASDAQ:DGICB), Altabancorp (NASDAQ:ALTA), BioDelivery Sciences International, Inc. (NASDAQ:BDSI), Avid Technology, Inc. (NASDAQ:AVID), and VirnetX Holding Corporation (NYSE:VHC). This group of stocks’ market valuations are similar to CODX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PEBO | 7 | 9510 | -2 |
| HSII | 14 | 76146 | -2 |
| DGICB | 1 | 216 | 0 |
| ALTA | 5 | 15512 | 1 |
| BDSI | 21 | 88274 | -5 |
| AVID | 19 | 124431 | 2 |
| VHC | 5 | 10446 | -1 |
| Average | 10.3 | 46362 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $3 million in CODX’s case. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is the most popular stock in this table. On the other hand Donegal Group, Inc. (NASDAQ:DGICB) is the least popular one with only 1 bullish hedge fund positions. Co-Diagnostics, Inc. (NASDAQ:CODX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CODX is 46. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately CODX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CODX investors were disappointed as the stock returned -12.5% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
