Do Hedge Funds Love Biolase Inc (BIOL)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Biolase Inc (NASDAQ:BIOL).

Is Biolase Inc (NASDAQ:BIOL) ready to rally soon? Prominent investors were taking an optimistic view. The number of bullish hedge fund positions went up by 1 in recent months. Biolase Inc (NASDAQ:BIOL) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that BIOL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 3 hedge funds in our database with BIOL holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a glance at the new hedge fund action regarding Biolase Inc (NASDAQ:BIOL).

How are hedge funds trading Biolase Inc (NASDAQ:BIOL)?

Heading into the fourth quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BIOL over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Hal Mintz’s Sabby Capital has the biggest position in Biolase Inc (NASDAQ:BIOL), worth close to $0.1 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Ali Motamed’s Invenomic Capital Management, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Biolase Inc (NASDAQ:BIOL), around 0.01% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to BIOL.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Sabby Capital, managed by Hal Mintz, assembled the most valuable position in Biolase Inc (NASDAQ:BIOL). Sabby Capital had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0 million position during the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Biolase Inc (NASDAQ:BIOL). We will take a look at WVS Financial Corp. (NASDAQ:WVFC), Mind Technology, Inc. (NASDAQ:MIND), Brickell Biotech, Inc. (NASDAQ:BBI), Flexible Solutions International, Inc. (NYSE:FSI), Yield10 Bioscience, Inc. (NASDAQ:YTEN), Celsion Corporation (NASDAQ:CLSN), and Kewaunee Scientific Corporation (NASDAQ:KEQU). This group of stocks’ market valuations match BIOL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WVFC 1 1673 0
MIND 3 6583 0
BBI 3 1222 0
FSI 2 998 1
YTEN 2 582 1
CLSN 3 518 -1
KEQU 3 1937 0
Average 2.4 1930 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $0 million in BIOL’s case. Mind Technology, Inc. (NASDAQ:MIND) is the most popular stock in this table. On the other hand WVS Financial Corp. (NASDAQ:WVFC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Biolase Inc (NASDAQ:BIOL) is more popular among hedge funds. Our overall hedge fund sentiment score for BIOL is 71. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Unfortunately BIOL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BIOL were disappointed as the stock returned 3.6% since the end of the third quarter (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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