A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on STAAR Surgical Company (NASDAQ:STAA).
STAAR Surgical Company (NASDAQ:STAA) was in 26 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. STAA has experienced an increase in hedge fund sentiment of late. There were 16 hedge funds in our database with STAA positions at the end of the first quarter. Our calculations also showed that STAA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s take a peek at the key hedge fund action regarding STAAR Surgical Company (NASDAQ:STAA).
Do Hedge Funds Think STAA Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 63% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in STAA over the last 24 quarters. So, let’s examine 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, Broadwood Capital, managed by Neal C. Bradsher, holds the number one position in STAAR Surgical Company (NASDAQ:STAA). Broadwood Capital has a $1.3213 billion position in the stock, comprising 59.1% of its 13F portfolio. The second most bullish fund manager of Palo Alto Investors, with a $193.3 million position; 10.7% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Efrem Kamen’s Pura Vida Investments, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Broadwood Capital allocated the biggest weight to STAAR Surgical Company (NASDAQ:STAA), around 59.06% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, designating 10.65 percent of its 13F equity portfolio to STAA.
As industrywide interest jumped, key money managers were breaking ground themselves. Bridgewater Associates, managed by Ray Dalio, initiated the largest position in STAAR Surgical Company (NASDAQ:STAA). Bridgewater Associates had $7.1 million invested in the company at the end of the quarter. Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management also initiated a $6.6 million position during the quarter. The other funds with brand new STAA positions are Andrew Dalrymple and Barry McCorkell’s Aubrey Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as STAAR Surgical Company (NASDAQ:STAA) but similarly valued. These stocks are Euronet Worldwide, Inc. (NASDAQ:EEFT), Change Healthcare Inc. (NASDAQ:CHNG), Nikola Corporation (NASDAQ:NKLA), Toll Brothers Inc (NYSE:TOL), Cullen/Frost Bankers, Inc. (NYSE:CFR), Axalta Coating Systems Ltd (NYSE:AXTA), and Digital Turbine Inc (NASDAQ:APPS). This group of stocks’ market values are closest to STAA’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $749 million. That figure was $1637 million in STAA’s case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Nikola Corporation (NASDAQ:NKLA) is the least popular one with only 12 bullish hedge fund positions. STAAR Surgical Company (NASDAQ:STAA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STAA is 57.9. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately STAA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); STAA investors were disappointed as the stock returned -24.7% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.