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Is Cryolife Inc (CRY) A Good Stock To Buy?

Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Cryolife Inc (NYSE:CRY) and see how the stock is affected by the recent hedge fund activity.

Hedge fund interest in Cryolife Inc (NYSE:CRY) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY), Arctic Cat Inc (NASDAQ:ACAT), and Pace Holdings Corp (NASDAQ:PACE) to gather more data points.

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In today’s marketplace there are several gauges market participants use to size up publicly traded companies. A duo of the best gauges is composed of hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best money managers can outclass the broader indices by a very impressive amount (see the details here).

With all of this in mind, let’s take a look at the key action surrounding Cryolife Inc (NYSE:CRY).

How have hedgies been trading Cryolife Inc (NYSE:CRY)?

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Cryolife Inc (NYSE:CRY), worth close to $6.5 million, comprising less than 0.1%% of its total 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, led by Jim Simons, holding an $5.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish encompass George McCabe’s Portolan Capital Management, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: HealthInvest Partners AB. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Springbok Capital).

Let’s check out hedge fund activity in other stocks similar to Cryolife Inc (NYSE:CRY). We will take a look at Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY), Arctic Cat Inc (NASDAQ:ACAT), Pace Holdings Corp (NASDAQ:PACE), and Bank of Marin Bancorp (NASDAQ:BMRC). This group of stocks’ market valuations resemble CRY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RBY 4 27783 -3
ACAT 7 18702 -2
PACE 18 166875 18
BMRC 4 16565 0

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $18 million in CRY’s case. Pace Holdings Corp (NASDAQ:PACE) is the most popular stock in this table. On the other hand Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY) is the least popular one with only 4 bullish hedge fund positions. Cryolife Inc (NYSE:CRY) is not the least popular stock in this group, but hedge fund interest is still below average. This may imply it is not a good stock to buy at the moment. Therefore, we’d rather spend our time researching stocks that have attracted attention from many investors. That kind alternative form this group is PACE, and you may want to consider it as a better candidate for a long position.

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