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 ConforMIS, Inc. (NASDAQ:CFMS) based on that data.
ConforMIS, Inc. (NASDAQ:CFMS) was in 7 hedge funds’ portfolios at the end of March. CFMS has seen an increase in enthusiasm from smart money recently. There were 6 hedge funds in our database with CFMS positions at the end of the previous quarter. Our calculations also showed that CFMS 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. With all of this in mind let’s go over the recent hedge fund action regarding ConforMIS, Inc. (NASDAQ:CFMS).
What have hedge funds been doing with ConforMIS, Inc. (NASDAQ:CFMS)?
At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CFMS over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in ConforMIS, Inc. (NASDAQ:CFMS) was held by Renaissance Technologies, which reported holding $3.3 million worth of stock at the end of September. It was followed by Archon Capital Management with a $2.8 million position. Other investors bullish on the company included AQR Capital Management, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to ConforMIS, Inc. (NASDAQ:CFMS), around 1.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0032 percent of its 13F equity portfolio to CFMS.
Now, specific money managers have jumped into ConforMIS, Inc. (NASDAQ:CFMS) headfirst. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in ConforMIS, Inc. (NASDAQ:CFMS). Citadel Investment Group had $0 million invested in the company at the end of the quarter. John Zaro’s Bourgeon Capital also initiated a $0 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to ConforMIS, Inc. (NASDAQ:CFMS). We will take a look at Stealth BioTherapeutics Corp (NASDAQ:MITO), CohBar, Inc. (NASDAQ:CWBR), Kingsway Financial Services Inc. (NYSE:KFS), and The LGL Group, Inc. (NYSE:LGL). All of these stocks’ market caps are closest to CFMS’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 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $7 million in CFMS’s case. The LGL Group, Inc. (NYSE:LGL) is the most popular stock in this table. On the other hand CohBar, Inc. (NASDAQ:CWBR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks ConforMIS, Inc. (NASDAQ:CFMS) 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 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on CFMS as the stock returned 55.4% so far in Q2 (through June 10th) 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.