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. In this article we are going to take a look at smart money sentiment towards STAAR Surgical Company (NASDAQ:STAA).
STAAR Surgical Company (NASDAQ:STAA) was in 21 hedge funds’ portfolios at the end of the first quarter of 2020. STAA has seen a decrease in hedge fund sentiment of late. There were 23 hedge funds in our database with STAA positions at the end of the previous quarter. Our calculations also showed that STAA 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 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Philip Hempleman of Ardsley Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the recent hedge fund action regarding STAAR Surgical Company (NASDAQ:STAA).
What does smart money think about STAAR Surgical Company (NASDAQ:STAA)?
At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in STAA over the last 18 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.
Among these funds, Broadwood Capital held the most valuable stake in STAAR Surgical Company (NASDAQ:STAA), which was worth $348.4 million at the end of the third quarter. On the second spot was Palo Alto Investors which amassed $105.8 million worth of shares. Pura Vida Investments, Ardsley Partners, and Marshall Wace LLP 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 Broadwood Capital allocated the biggest weight to STAAR Surgical Company (NASDAQ:STAA), around 40.72% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, dishing out 8.86 percent of its 13F equity portfolio to STAA.
Because STAAR Surgical Company (NASDAQ:STAA) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedge funds who were dropping their full holdings heading into Q4. Intriguingly, Kevin Kotler’s Broadfin Capital dropped the largest position of the 750 funds watched by Insider Monkey, valued at about $16.3 million in stock, and Mitchell Blutt’s Consonance Capital Management was right behind this move, as the fund said goodbye to about $15 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to STAAR Surgical Company (NASDAQ:STAA). We will take a look at Primo Water Corporation (NYSE:PRMW), Pebblebrook Hotel Trust (NYSE:PEB), Hillenbrand, Inc. (NYSE:HI), and Worthington Industries, Inc. (NYSE:WOR). All of these stocks’ market caps match STAA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRMW | 36 | 463146 | 23 |
| PEB | 10 | 224467 | -12 |
| HI | 14 | 124446 | -10 |
| WOR | 14 | 33700 | -11 |
| Average | 18.5 | 211440 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $519 million in STAA’s case. Primo Water Corporation (NYSE:PRMW) is the most popular stock in this table. On the other hand Pebblebrook Hotel Trust (NYSE:PEB) is the least popular one with only 10 bullish hedge fund positions. STAAR Surgical Company (NASDAQ:STAA) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on STAA as the stock returned 42.2% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
