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Did Hedge Funds Make The Right Call On SI-BONE, Inc. (SIBN) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SI-BONE, Inc. (NASDAQ:SIBN) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Is SI-BONE, Inc. (NASDAQ:SIBN) the right pick for your portfolio? Prominent investors were betting on the stock. The number of long hedge fund positions inched up by 12 in recent months. Our calculations also showed that SIBN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

At the moment there are numerous gauges market participants use to value publicly traded companies. A pair of the most innovative gauges are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the broader indices by a superb margin (see the details here).

Justin John Ferayorni - Tamarack Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to analyze the new hedge fund action regarding SI-BONE, Inc. (NASDAQ:SIBN).

What does smart money think about SI-BONE, Inc. (NASDAQ:SIBN)?

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 171% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SIBN over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Is SIBN A Good Stock To Buy?

Among these funds, OrbiMed Advisors held the most valuable stake in SI-BONE, Inc. (NASDAQ:SIBN), which was worth $16.5 million at the end of the third quarter. On the second spot was Endurant Capital Management which amassed $15.8 million worth of shares. Driehaus Capital, Millennium Management, and Pura Vida Investments were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Endurant Capital Management allocated the biggest weight to SI-BONE, Inc. (NASDAQ:SIBN), around 7.16% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, setting aside 1.57 percent of its 13F equity portfolio to SIBN.

Now, key hedge funds have jumped into SI-BONE, Inc. (NASDAQ:SIBN) headfirst. OrbiMed Advisors, managed by Samuel Isaly, created the biggest position in SI-BONE, Inc. (NASDAQ:SIBN). OrbiMed Advisors had $16.5 million invested in the company at the end of the quarter. Efrem Kamen’s Pura Vida Investments also made a $6.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Justin John Ferayorni’s Tamarack Capital Management, Ian Simm’s Impax Asset Management, and Benjamin A. Smith’s Laurion Capital Management.

Let’s check out hedge fund activity in other stocks similar to SI-BONE, Inc. (NASDAQ:SIBN). These stocks are Voyager Therapeutics, Inc. (NASDAQ:VYGR), Triple-S Management Corp.(NYSE:GTS), Century Bancorp, Inc. (NASDAQ:CNBKA), and Amalgamated Bank (NASDAQ:AMAL). This group of stocks’ market caps resemble SIBN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VYGR 15 50333 -5
GTS 11 94868 -7
CNBKA 4 13897 -1
AMAL 12 27523 2
Average 10.5 46655 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $78 million in SIBN’s case. Voyager Therapeutics, Inc. (NASDAQ:VYGR) is the most popular stock in this table. On the other hand Century Bancorp, Inc. (NASDAQ:CNBKA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks SI-BONE, Inc. (NASDAQ:SIBN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 18.6% in 2020 through July 27th but still managed to beat the market by 17.1 percentage points. Hedge funds were also right about betting on SIBN as the stock returned 40.8% since Q1 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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