Hedge Funds Have Never Been This Bullish On Catasys, Inc. (CATS)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Catasys, Inc. (NASDAQ:CATS).

Catasys, Inc. (NASDAQ:CATS) has experienced an increase in enthusiasm from smart money lately. Our calculations also showed that CATS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are many formulas stock market investors can use to size up publicly traded companies. Two of the most underrated formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outperform the S&P 500 by a superb margin (see the details here).


Israel Englander of Millennium Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now, we’re going to take a peek at the latest hedge fund action surrounding Catasys, Inc. (NASDAQ:CATS).

Hedge fund activity in Catasys, Inc. (NASDAQ:CATS)

At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CATS over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is CATS A Good Stock To Buy?

More specifically, Knoll Capital Management was the largest shareholder of Catasys, Inc. (NASDAQ:CATS), with a stake worth $0.7 million reported as of the end of September. Trailing Knoll Capital Management was Millennium Management, which amassed a stake valued at $0.6 million. Driehaus Capital, AQR Capital Management, and Ancora Advisors 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 Knoll Capital Management allocated the biggest weight to Catasys, Inc. (NASDAQ:CATS), around 0.62% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to CATS.

As one would reasonably expect, key money managers have jumped into Catasys, Inc. (NASDAQ:CATS) headfirst. AQR Capital Management, managed by Cliff Asness, created the largest position in Catasys, Inc. (NASDAQ:CATS). AQR Capital Management had $0.2 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $0.2 million investment in the stock during the quarter.

Let’s go over hedge fund activity in other stocks similar to Catasys, Inc. (NASDAQ:CATS). These stocks are Collectors Universe, Inc. (NASDAQ:CLCT), Viemed Healthcare, Inc. (NASDAQ:VMD), Pioneer Floating Rate Trust (NYSE:PHD), and Mayville Engineering Company, Inc. (NYSE:MEC). This group of stocks’ market valuations are closest to CATS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLCT 9 34458 2
VMD 4 11765 4
PHD 1 25269 -2
MEC 11 19398 2
Average 6.25 22723 1.5

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 $23 million. That figure was $2 million in CATS’s case. Mayville Engineering Company, Inc. (NYSE:MEC) is the most popular stock in this table. On the other hand Pioneer Floating Rate Trust (NYSE:PHD) is the least popular one with only 1 bullish hedge fund positions. Catasys, Inc. (NASDAQ:CATS) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CATS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CATS were disappointed as the stock returned -2.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 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.