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Do Hedge Funds Love HTG Molecular Diagnostics, Inc. (HTGM)?

In this article you are going to find out whether hedge funds think HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) was in 4 hedge funds’ portfolios at the end of March. HTGM has experienced an increase in enthusiasm from smart money of late. There were 2 hedge funds in our database with HTGM positions at the end of the previous quarter. Our calculations also showed that HTGM 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding

David Harding of Winton Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the key hedge fund action surrounding HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM).

Hedge fund activity in HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM)

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HTGM over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the largest position in HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM), worth close to $1.6 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Stonepine Capital, managed by Timothy P. Lynch, which holds a $0.3 million position; 0.3% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish include David Harding’s Winton Capital Management, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Stonepine Capital allocated the biggest weight to HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM), around 0.34% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to HTGM.

As one would reasonably expect, some big names have jumped into HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) headfirst. Stonepine Capital, managed by Timothy P. Lynch, created the biggest position in HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM). Stonepine Capital had $0.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0 million investment in the stock during the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) but similarly valued. These stocks are GSE Systems, Inc. (NASDAQ:GVP), Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF), Optical Cable Corporation (NASDAQ:OCC), and Wilhelmina International, Inc. (NASDAQ:WHLM). This group of stocks’ market values resemble HTGM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GVP 2 834 -1
JCTCF 1 998 0
OCC 1 277 0
WHLM 1 836 0
Average 1.25 736 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.25 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in HTGM’s case. GSE Systems, Inc. (NASDAQ:GVP) is the most popular stock in this table. On the other hand Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on HTGM as the stock returned 63% so far in Q2 (through the end of May) 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.