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Hedge Funds Cautiously Watching Zynex, Inc. (ZYXI)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Zynex, Inc. (NASDAQ:ZYXI) based on that data.

Zynex, Inc. (NASDAQ:ZYXI) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Crawford & Company (NYSE:CRD), WisdomTree Investments, Inc. (NASDAQ:WETF), and Kosmos Energy Ltd (NYSE:KOS) to gather more data points. Our calculations also showed that ZYXI 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 today’s marketplace there are plenty of signals investors put to use to size up stocks. Some of the best signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the market by a superb amount (see the details here).

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

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 stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind we’re going to check out the new hedge fund action regarding Zynex, Inc. (NASDAQ:ZYXI).

What does smart money think about Zynex, Inc. (NASDAQ:ZYXI)?

At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 2 hedge funds with a bullish position in ZYXI a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Soleus Capital, managed by Guy Levy, holds the largest position in Zynex, Inc. (NASDAQ:ZYXI). Soleus Capital has a $3.9 million position in the stock, comprising 4.5% of its 13F portfolio. The second most bullish fund manager is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $1.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish contain Renaissance Technologies, Cliff Asness’s AQR Capital Management and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Soleus Capital allocated the biggest weight to Zynex, Inc. (NASDAQ:ZYXI), around 4.49% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to ZYXI.

Because Zynex, Inc. (NASDAQ:ZYXI) has faced bearish sentiment from the smart money, it’s easy to see that there is a sect of funds that decided to sell off their entire stakes in the first quarter. At the top of the heap, Israel Englander’s Millennium Management sold off the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $2.1 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Zynex, Inc. (NASDAQ:ZYXI). These stocks are Crawford & Company (NYSE:CRD), WisdomTree Investments, Inc. (NASDAQ:WETF), Kosmos Energy Ltd (NYSE:KOS), and Scholar Rock Holding Corporation (NASDAQ:SRRK). This group of stocks’ market valuations match ZYXI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRD 10 49389 0
WETF 20 38214 3
KOS 21 28495 -9
SRRK 5 40575 -2
Average 14 39168 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $8 million in ZYXI’s case. Kosmos Energy Ltd (NYSE:KOS) is the most popular stock in this table. On the other hand Scholar Rock Holding Corporation (NASDAQ:SRRK) is the least popular one with only 5 bullish hedge fund positions. Zynex, Inc. (NASDAQ:ZYXI) is not the least popular stock in this group but hedge fund interest is still below 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on ZYXI as the stock returned 92.1% during the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.