Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Accuray Incorporated (NASDAQ:ARAY) worth your attention right now? Hedge funds are getting more optimistic. The number of bullish hedge fund positions advanced by 4 recently. ARAYwas in 18 hedge funds’ portfolios at the end of the third quarter of 2016. There were 14 hedge funds in our database with ARAY positions at the end of the previous quarter. At the end of this article we will also compare ARAY to other stocks including China Cord Blood Corp (NYSE:CO), The Chefs Warehouse, Inc (NASDAQ:CHEF), and ArcBest Corp (NASDAQ:ARCB) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What does the smart money think about Accuray Incorporated (NASDAQ:ARAY)?
Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 29% from the second quarter of 2016, as ownership of the stock begins to rebound. The graph below displays the number of hedge funds with bullish position in ARAY over the last 5 quarters. So, let’s find out 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, Jim Simons’ Renaissance Technologies has the most valuable position in Accuray Incorporated (NASDAQ:ARAY), worth close to $27.3 million. On Renaissance Technologies’ heels is Christopher James of Partner Fund Management, with a $26.9 million position. Other peers with similar optimism include Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Chuck Royce’s Royce & Associates, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, key money managers were leading the bulls’ herd. Pura Vida Investments, led by Efrem Kamen, created the most outsized position in Accuray Incorporated (NASDAQ:ARAY). Pura Vida Investments had $3.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.4 million position during the quarter. The other funds with new positions in the stock are Efrem Kamen’s Pura Vida Investments, Neil Chriss’ Hutchin Hill Capital, and Mike Vranos’ Ellington.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Accuray Incorporated (NASDAQ:ARAY) but similarly valued. These stocks are China Cord Blood Corp (NYSE:CO), The Chefs Warehouse, Inc (NASDAQ:CHEF), ArcBest Corp (NASDAQ:ARCB), and Enanta Pharmaceuticals Inc (NASDAQ:ENTA). All of these stocks’ market caps are closest to ARAY’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $104 million in ARAY’s case. ArcBest Corp (NASDAQ:ARCB) is the most popular stock in this table. On the other hand China Cord Blood Corp (NYSE:CO) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Accuray Incorporated (NASDAQ:ARAY) 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.