Is NeoGenomics, Inc. (NEO) A Good Stock To Buy?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards NeoGenomics, Inc. (NASDAQ:NEO).

NeoGenomics, Inc. (NASDAQ:NEO) shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. NEO was in 12 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with NEO positions at the end of the previous quarter. 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 Nantkwest Inc (NASDAQ:NK), AngioDynamics, Inc. (NASDAQ:ANGO), and Cerus Corporation (NASDAQ:CERS) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading NeoGenomics, Inc. (NASDAQ:NEO)?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NEO over the last 5 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Driehaus Capital, led by Richard Driehaus, holds the largest position in NeoGenomics, Inc. (NASDAQ:NEO). Driehaus Capital has a $15.3 million position in the stock. Coming in second is Royce & Associates, led by Chuck Royce, which holds a $5.4 million position. Remaining members of the smart money that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies, one of the largest hedge funds in the world,  and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since NeoGenomics, Inc. (NASDAQ:NEO) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies that elected to cut their full holdings heading into Q4. Intriguingly, Mark Coe’s Coe Capital Management got rid of the largest position of the 700 funds monitored by Insider Monkey, comprising an estimated $0.5 million in stock. D. E. Shaw’s fund, D E Shaw, also dumped its stock, about $0.2 million worth.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NeoGenomics, Inc. (NASDAQ:NEO) but similarly valued. We will take a look at Nantkwest Inc (NASDAQ:NK), AngioDynamics, Inc. (NASDAQ:ANGO), Cerus Corporation (NASDAQ:CERS), and Thermon Group Holdings Inc (NYSE:THR). This group of stocks’ market valuations match NEO’s market valuation.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $29 million in NEO’s case. AngioDynamics, Inc. (NASDAQ:ANGO) is the most popular stock in this table. On the other hand Thermon Group Holdings Inc (NYSE:THR) is the least popular one with only 4 bullish hedge fund positions. NeoGenomics, Inc. (NASDAQ:NEO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ANGO might be a better candidate to consider taking a long position in.

Disclosure: None