In this article we will take a look at whether hedge funds think Avinger Inc (NASDAQ:AVGR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Avinger Inc (NASDAQ:AVGR) was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. AVGR investors should be aware of an increase in hedge fund sentiment recently. There were 2 hedge funds in our database with AVGR positions at the end of the previous quarter. Our calculations also showed that AVGR 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the key hedge fund action surrounding Avinger Inc (NASDAQ:AVGR).
Hedge fund activity in Avinger Inc (NASDAQ:AVGR)
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. By comparison, 1 hedge funds held shares or bullish call options in AVGR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Sabby Capital was the largest shareholder of Avinger Inc (NASDAQ:AVGR), with a stake worth $0.2 million reported as of the end of September. Trailing Sabby Capital was Renaissance Technologies, which amassed a stake valued at $0.1 million. Citadel Investment Group was 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 Sabby Capital allocated the biggest weight to Avinger Inc (NASDAQ:AVGR), around 0.1% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0001 percent of its 13F equity portfolio to AVGR.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Sabby Capital, managed by Hal Mintz, established the most valuable position in Avinger Inc (NASDAQ:AVGR). Sabby Capital had $0.2 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks similar to Avinger Inc (NASDAQ:AVGR). These stocks are Genius Brands International, Inc. (NASDAQ:GNUS), AIkido Pharma Inc. (NASDAQ:AIKI) , PLUS THERAPEUTICS, Inc. (NASDAQ:PSTV), and Francesca’s Holdings Corp (NASDAQ:FRAN). This group of stocks’ market valuations match AVGR’s market valuation.
|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 2 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $0 million in AVGR’s case. Francesca’s Holdings Corp (NASDAQ:FRAN) is the most popular stock in this table. On the other hand Genius Brands International, Inc. (NASDAQ:GNUS) is the least popular one with only 1 bullish hedge fund positions. Avinger Inc (NASDAQ:AVGR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately AVGR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AVGR were disappointed as the stock returned -17.8% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.