At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Exactech, Inc. (NASDAQ:EXAC) shareholders have witnessed an increase in hedge fund sentiment of late. There were 11 hedge funds in our database with EXAC holdings at the end of September. At the end of this article we will also compare EXAC to other stocks including IES Holdings Inc (NASDAQ:IESC), OMNOVA Solutions Inc. (NYSE:OMN), and Applied Optoelectronics Inc (NASDAQ:AAOI) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s go over the new action surrounding Exactech, Inc. (NASDAQ:EXAC).
What have hedge funds been doing with Exactech, Inc. (NASDAQ:EXAC)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EXAC over the last 5 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, led by Mario Gabelli, holds the most valuable position in Exactech, Inc. (NASDAQ:EXAC). GAMCO Investors has a $17.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $6.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies, one of the largest hedge funds in the world, and Robert B. Gillam’s McKinley Capital Management. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key money managers have been driving this bullishness. Millennium Management, led by Israel Englander, assembled the largest position in Exactech, Inc. (NASDAQ:EXAC). Millennium Management had $0.5 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also initiated a $0.2 million position during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Exactech, Inc. (NASDAQ:EXAC). We will take a look at IES Holdings Inc (NASDAQ:IESC), OMNOVA Solutions Inc. (NYSE:OMN), Applied Optoelectronics Inc (NASDAQ:AAOI), and Almost Family, Inc. (NASDAQ:AFAM). All of these stocks’ market caps are closest to EXAC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $36 million in EXAC’s case. OMNOVA Solutions Inc. (NYSE:OMN) is the most popular stock in this table. On the other hand IES Holdings Inc (NASDAQ:IESC) is the least popular one with only 6 bullish hedge fund positions. Exactech, Inc. (NASDAQ:EXAC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OMN might be a better candidate to consider taking a long position in.