Hedge Funds Have Never Been This Bullish On Cutera, Inc. (CUTR)

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Cutera, Inc. (NASDAQ:CUTR).

Cutera, Inc. (NASDAQ:CUTR) has experienced an increase in support from the world’s most elite money managers lately. Cutera, Inc. (NASDAQ:CUTR) was in 24 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 22 hedge funds in our database with CUTR holdings at the end of June. Our calculations also showed that CUTR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a look at the latest hedge fund action surrounding Cutera, Inc. (NASDAQ:CUTR).

Do Hedge Funds Think CUTR Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CUTR over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CUTR A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Voce Capital, managed by J. Daniel Plants, holds the largest position in Cutera, Inc. (NASDAQ:CUTR). Voce Capital has a $56.4 million position in the stock, comprising 20.4% of its 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which holds a $54.8 million position; 0.5% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions consist of Efrem Kamen’s Pura Vida Investments, Israel Englander’s Millennium Management and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Voce Capital allocated the biggest weight to Cutera, Inc. (NASDAQ:CUTR), around 20.41% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, designating 1.14 percent of its 13F equity portfolio to CUTR.

As one would reasonably expect, key hedge funds have jumped into Cutera, Inc. (NASDAQ:CUTR) headfirst. Driehaus Capital, managed by Richard Driehaus, established the biggest position in Cutera, Inc. (NASDAQ:CUTR). Driehaus Capital had $7.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.8 million position during the quarter. The following funds were also among the new CUTR investors: Michael Gelband’s ExodusPoint Capital, Cliff Asness’s AQR Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cutera, Inc. (NASDAQ:CUTR) but similarly valued. We will take a look at Dynegy Inc. (NYSE:DYN), HighPeak Energy, Inc. (NASDAQ:HPK), Douglas Dynamics Inc (NYSE:PLOW), Meridian Bioscience, Inc. (NASDAQ:VIVO), Photronics, Inc. (NASDAQ:PLAB), Ebix Inc (NASDAQ:EBIX), and Smart Share Global Limited (NASDAQ:EM). All of these stocks’ market caps are similar to CUTR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DYN 19 236075 -4
HPK 1 30 -1
PLOW 9 30935 -2
VIVO 15 137511 2
PLAB 17 86453 2
EBIX 10 12593 2
EM 4 16500 -2
Average 10.7 74300 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $251 million in CUTR’s case. Dynegy Inc. (NYSE:DYN) is the most popular stock in this table. On the other hand HighPeak Energy, Inc. (NASDAQ:HPK) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Cutera, Inc. (NASDAQ:CUTR) is more popular among hedge funds. Our overall hedge fund sentiment score for CUTR is 87. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately CUTR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CUTR were disappointed as the stock returned -17.5% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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