Fat Wars: Is Jim Chanos Short ZELTIQ Aesthetics Inc (ZLTQ)?

Based on hedge fund data, the smart money seems to like Cynosure more than ZELTIQ. Only 6% of Cynosure’s float is short, while 25 funds from our database held in aggregate 17% of the company’s float at the end of June. That gives Cynosure a net smart money long float of 11%. Meanwhile, 26% of ZELTIQ’s float is short and 27.90% of the company’s float was held by the smart money investors tracked by us in the same time period. That gives ZELTIQ a net smart money long float of 1.9%.

It’s not surprising that many investors would like Cynosure. Due to the inherent desire to be beautiful, the aesthetic market has grown rapidly and Cynosure has grown with it. Through both organic growth and M&A, Cynosure has increased its revenue by an average of 29% a year from 2009 to 2015. The rapid growth has helped Cynosure shares rise by 10 fold in the same time frame. Cynosure has more growth ahead. According to the research firm Medical Insight, Inc, the market for energy-based aesthetic devices should grow by an average of 9.3% a year until 2019, while the market for skin tightening and body shaping should grow by an average of 13.6% a year for the next three years. If Cynosure’s SculpSure sales continue to outperform, the stock has considerable upside left. Brean Capital has a $60 price target.

Disclosure: none