At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Motus GI Holdings, Inc. (NASDAQ:MOTS) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Motus GI Holdings, Inc. (NASDAQ:MOTS) has seen an increase in enthusiasm from smart money lately. MOTS was in 10 hedge funds’ portfolios at the end of March. There were 9 hedge funds in our database with MOTS positions at the end of the previous quarter. Our calculations also showed that MOTS 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. With all of this in mind we’re going to check out the key hedge fund action encompassing Motus GI Holdings, Inc. (NASDAQ:MOTS).
How have hedgies been trading Motus GI Holdings, Inc. (NASDAQ:MOTS)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MOTS over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Joseph Edelman’s Perceptive Advisors has the most valuable position in Motus GI Holdings, Inc. (NASDAQ:MOTS), worth close to $2.8 million, amounting to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Nantahala Capital Management, led by Wilmot B. Harkey and Daniel Mack, holding a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Adam Usdan’s Trellus Management Company, Nick Thakore’s Diametric Capital and Anand Parekh’s Alyeska Investment Group. In terms of the portfolio weights assigned to each position Trellus Management Company allocated the biggest weight to Motus GI Holdings, Inc. (NASDAQ:MOTS), around 0.31% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, designating 0.15 percent of its 13F equity portfolio to MOTS.
Now, specific money managers have jumped into Motus GI Holdings, Inc. (NASDAQ:MOTS) headfirst. Trellus Management Company, managed by Adam Usdan, created the biggest position in Motus GI Holdings, Inc. (NASDAQ:MOTS). Trellus Management Company had $0.2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.1 million position during the quarter. The only other fund with a brand new MOTS position is Ken Griffin’s Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Motus GI Holdings, Inc. (NASDAQ:MOTS) but similarly valued. These stocks are Cleveland BioLabs, Inc. (NASDAQ:CBLI), Huttig Building Products, Inc. (NASDAQ:HBP), Foresight Autonomous Holdings Ltd. (NASDAQ:FRSX), and HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM). This group of stocks’ market caps match MOTS’s market cap.
|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 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $4 million in MOTS’s case. HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) is the most popular stock in this table. On the other hand Foresight Autonomous Holdings Ltd. (NASDAQ:FRSX) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Motus GI Holdings, Inc. (NASDAQ:MOTS) 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on MOTS as the stock returned 95.8% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.