After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Pro-Dex, Inc. (NASDAQ:PDEX).
Pro-Dex, Inc. (NASDAQ:PDEX) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. Pro-Dex, Inc. (NASDAQ:PDEX) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 4. There were 2 hedge funds in our database with PDEX holdings at the end of June. Our calculations also showed that PDEX isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to analyze the latest hedge fund action surrounding Pro-Dex, Inc. (NASDAQ:PDEX).
What have hedge funds been doing with Pro-Dex, Inc. (NASDAQ:PDEX)?
At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in PDEX over the last 21 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 holdings considerably (or already accumulated large positions).
The largest stake in Pro-Dex, Inc. (NASDAQ:PDEX) was held by Renaissance Technologies, which reported holding $1.5 million worth of stock at the end of September. It was followed by Millennium Management with a $0.4 million position. The only other hedge fund that is bullish on the company was Springbok Capital.
Consequently, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the most valuable position in Pro-Dex, Inc. (NASDAQ:PDEX). Millennium Management had $0.4 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pro-Dex, Inc. (NASDAQ:PDEX) but similarly valued. We will take a look at X4 Pharmaceuticals, Inc. (NASDAQ:XFOR), Kura Sushi USA, Inc. (NASDAQ:KRUS), Cumulus Media Inc (NASDAQ:CMLS), IntriCon Corporation (NASDAQ:IIN), Palatin Technologies, Inc. (NYSE:PTN), Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), and C&F Financial Corp (NASDAQ:CFFI). This group of stocks’ market caps resemble PDEX’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 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $2 million in PDEX’s case. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is the most popular stock in this table. On the other hand C&F Financial Corp (NASDAQ:CFFI) is the least popular one with only 2 bullish hedge fund positions. Pro-Dex, Inc. (NASDAQ:PDEX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PDEX is 32.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on PDEX as the stock returned 29.7% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.