Co-Diagnostics, Inc. (CODX) Fell Out Of Favor With Hedge Funds

In this article we will analyze whether Co-Diagnostics, Inc. (NASDAQ:CODX) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Co-Diagnostics, Inc. (NASDAQ:CODX) going to take off soon? Hedge funds were taking a pessimistic view. The number of long hedge fund positions fell by 1 in recent months. Co-Diagnostics, Inc. (NASDAQ:CODX) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 5. Our calculations also showed that CODX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 5 hedge funds in our database with CODX positions at the end of the fourth quarter.

In today’s marketplace there are numerous tools investors can use to value their stock investments. Two of the most innovative tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite investment managers can outpace their index-focused peers by a solid margin (see the details here). 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 .

David Harding

David Harding of Winton Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Co-Diagnostics, Inc. (NASDAQ:CODX).

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

At first quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in CODX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Is CODX A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest call position in Co-Diagnostics, Inc. (NASDAQ:CODX), worth close to $2.4 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $1.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism encompass Ken Griffin’s Citadel Investment Group, Greg Eisner’s Engineers Gate Manager and Karim Abbadi and Edward McBride’s Centiva Capital. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to Co-Diagnostics, Inc. (NASDAQ:CODX), around 0.02% of its 13F portfolio. Centiva Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CODX.

Because Co-Diagnostics, Inc. (NASDAQ:CODX) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely by the end of the first quarter. Intriguingly, Israel Englander’s Millennium Management dumped the largest position of all the hedgies monitored by Insider Monkey, valued at about $0.6 million in stock. David Harding’s fund, Winton Capital Management, also dropped its stock, about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks similar to Co-Diagnostics, Inc. (NASDAQ:CODX). We will take a look at Blue Ridge Bankshares, Inc. (NYSE:BRBS), Aqua Metals, Inc. (NASDAQ:AQMS), Oramed Pharmaceuticals Inc. (NASDAQ:ORMP), The Cato Corporation (NYSE:CATO), Platinum Group Metals Limited (NYSE:PLG), Value Line, Inc. (NASDAQ:VALU), and Vincerx Pharma, Inc. (NASDAQ:VINC). This group of stocks’ market valuations resemble CODX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BRBS 4 31909 1
AQMS 5 4210 2
ORMP 4 2374 -2
CATO 14 20138 2
PLG 6 5348 -1
VALU 2 2401 0
VINC 16 88367 5
Average 7.3 22107 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $3 million in CODX’s case. Vincerx Pharma, Inc. (NASDAQ:VINC) is the most popular stock in this table. On the other hand Value Line, Inc. (NASDAQ:VALU) is the least popular one with only 2 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 35.1. 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 negative signal and 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately CODX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CODX investors were disappointed as the stock returned -7.4% since the end of March (through 6/11) 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 most of these stocks already outperformed the market in 2021.

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