Hedge Funds Have Never Been More Bullish On Cytosorbents Corp (CTSO)

In this article we will take a look at whether hedge funds think Cytosorbents Corp (NASDAQ:CTSO) 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.

Is Cytosorbents Corp (NASDAQ:CTSO) an outstanding investment today? Investors who are in the know are becoming more confident. The number of bullish hedge fund bets improved by 4 in recent months. Our calculations also showed that CTSO 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Sander Gerber of Hudson Bay Capital

Sander Gerber of Hudson Bay Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Now we’re going to view the recent hedge fund action surrounding Cytosorbents Corp (NASDAQ:CTSO).

What have hedge funds been doing with Cytosorbents Corp (NASDAQ:CTSO)?

At Q1’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 80% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in CTSO a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Is CTSO A Good Stock To Buy?

The largest stake in Cytosorbents Corp (NASDAQ:CTSO) was held by Skylands Capital, which reported holding $8.7 million worth of stock at the end of September. It was followed by Manatuck Hill Partners with a $1 million position. Other investors bullish on the company included Two Sigma Advisors, Soleus Capital, and Royce & Associates. In terms of the portfolio weights assigned to each position Skylands Capital allocated the biggest weight to Cytosorbents Corp (NASDAQ:CTSO), around 1.93% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, setting aside 0.89 percent of its 13F equity portfolio to CTSO.

Now, specific money managers were breaking ground themselves. Manatuck Hill Partners, managed by Mark Broach, created the largest position in Cytosorbents Corp (NASDAQ:CTSO). Manatuck Hill Partners had $1 million invested in the company at the end of the quarter. Guy Levy’s Soleus Capital also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Chuck Royce’s Royce & Associates, Sander Gerber’s Hudson Bay Capital Management, and Israel Englander’s Millennium Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cytosorbents Corp (NASDAQ:CTSO) but similarly valued. These stocks are Bar Harbor Bankshares (NYSE:BHB), Northern Oil & Gas, Inc. (NYSE:NOG), West Bancorporation, Inc. (NASDAQ:WTBA), and Sierra Bancorp (NASDAQ:BSRR). This group of stocks’ market values resemble CTSO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BHB 4 6485 -1
NOG 12 33650 -9
WTBA 4 7660 -2
BSRR 5 9535 -3
Average 6.25 14333 -3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $12 million in CTSO’s case. Northern Oil & Gas, Inc. (NYSE:NOG) is the most popular stock in this table. On the other hand Bar Harbor Bankshares (NYSE:BHB) is the least popular one with only 4 bullish hedge fund positions. Cytosorbents Corp (NASDAQ:CTSO) 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately CTSO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CTSO were disappointed as the stock returned 19.9% 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.

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