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Hedge Funds Are Selling Accuray Incorporated (ARAY)

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Accuray Incorporated (NASDAQ:ARAY)?

Accuray Incorporated (NASDAQ:ARAY) investors should pay attention to a decrease in enthusiasm from smart money in recent months. Our calculations also showed that ARAY 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.

In the eyes of most investors, hedge funds are viewed as slow, old investment tools of the past. While there are more than 8000 funds with their doors open at present, We look at the masters of this group, about 850 funds. These money managers have their hands on bulk of all hedge funds’ total capital, and by paying attention to their highest performing equity investments, Insider Monkey has determined a few investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Nathan Fischel DAFNA Capital

Nathan Fischel of DAFNA Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing Accuray Incorporated (NASDAQ:ARAY).

What have hedge funds been doing with Accuray Incorporated (NASDAQ:ARAY)?

At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in ARAY a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Accuray Incorporated (NASDAQ:ARAY), which was worth $9 million at the end of the third quarter. On the second spot was Archon Capital Management which amassed $8.4 million worth of shares. D E Shaw, Royce & Associates, and DAFNA Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Accuray Incorporated (NASDAQ:ARAY), around 3.1% of its 13F portfolio. Voce Capital is also relatively very bullish on the stock, designating 0.76 percent of its 13F equity portfolio to ARAY.

Due to the fact that Accuray Incorporated (NASDAQ:ARAY) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies that decided to sell off their positions entirely in the first quarter. Interestingly, Israel Englander’s Millennium Management dumped the biggest stake of the 750 funds watched by Insider Monkey, comprising about $2.6 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund sold off about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds in the first quarter.

Let’s go over hedge fund activity in other stocks similar to Accuray Incorporated (NASDAQ:ARAY). We will take a look at InfuSystem Holdings, Inc. (NYSE:INFU), Norwood Financial Corp. (NASDAQ:NWFL), KVH Industries, Inc. (NASDAQ:KVHI), and Northern Dynasty Minerals Ltd. (NYSE:NAK). This group of stocks’ market valuations resemble ARAY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INFU 7 23271 -2
NWFL 2 1990 0
KVHI 6 10489 1
NAK 5 7362 -1
Average 5 10778 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $31 million in ARAY’s case. InfuSystem Holdings, Inc. (NYSE:INFU) is the most popular stock in this table. On the other hand Norwood Financial Corp. (NASDAQ:NWFL) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Accuray Incorporated (NASDAQ:ARAY) 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 gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately ARAY wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ARAY were disappointed as the stock returned 17.4% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.