The market has been volatile as the Federal Reserve continues its rate hikes to normalize the interest rates. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by about 4 percentage points through November 16th. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Invuity, Inc. (NASDAQ:IVTY) and find out how it is affected by hedge funds’ moves.
Invuity, Inc. (NASDAQ:IVTY) shareholders have witnessed an increase in enthusiasm from smart money in recent months. IVTY was in 12 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with IVTY positions at the end of the previous quarter. Our calculations also showed that IVTY isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the fresh hedge fund action surrounding Invuity, Inc. (NASDAQ:IVTY).
How have hedgies been trading Invuity, Inc. (NASDAQ:IVTY)?
Heading into the fourth quarter of 2018, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 71% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in IVTY heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Invuity, Inc. (NASDAQ:IVTY) was held by Cannell Capital, which reported holding $15.2 million worth of stock at the end of September. It was followed by Partner Fund Management with a $10.1 million position. Other investors bullish on the company included Millennium Management, Water Island Capital, and Springbok Capital.
As aggregate interest increased, key money managers were leading the bulls’ herd. Water Island Capital, managed by John Orrico, assembled the biggest position in Invuity, Inc. (NASDAQ:IVTY). Water Island Capital had $4.7 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also made a $1.7 million investment in the stock during the quarter. The following funds were also among the new IVTY investors: James Dondero’s Highland Capital Management, Ken Griffin’s Citadel Investment Group, and Mario Gabelli’s GAMCO Investors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Invuity, Inc. (NASDAQ:IVTY) but similarly valued. These stocks are Vuzix Corporation (NASDAQ:VUZI), Akoustis Technologies, Inc. (NASDAQ:AKTS), Delaware Enhanced Global Dividend and Income Fund (NYSE:DEX), and DURECT Corporation (NASDAQ:DRRX). This group of stocks’ market caps match IVTY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VUZI | 2 | 800 | -1 |
| AKTS | 4 | 3884 | 1 |
| DEX | 2 | 29256 | 0 |
| DRRX | 6 | 4444 | -5 |
| Average | 3.5 | 9596 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $41 million in IVTY’s case. DURECT Corporation (NASDAQ:DRRX) is the most popular stock in this table. On the other hand Vuzix Corporation (NASDAQ:VUZI) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Invuity, Inc. (NASDAQ:IVTY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
