World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
AngioDynamics, Inc. (NASDAQ:ANGO) was in 12 hedge funds’ portfolios at the end of the fourth quarter of 2018. ANGO investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 15 hedge funds in our database with ANGO positions at the end of the previous quarter. Our calculations also showed that ANGO isn’t among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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 our short portfolio.
We’re going to take a peek at the latest hedge fund action regarding AngioDynamics, Inc. (NASDAQ:ANGO).
What have hedge funds been doing with AngioDynamics, Inc. (NASDAQ:ANGO)?
At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in ANGO over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in AngioDynamics, Inc. (NASDAQ:ANGO), which was worth $15.2 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $11.7 million worth of shares. Moreover, GLG Partners, D E Shaw, and Citadel Investment Group were also bullish on AngioDynamics, Inc. (NASDAQ:ANGO), allocating a large percentage of their portfolios to this stock.
Judging by the fact that AngioDynamics, Inc. (NASDAQ:ANGO) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Kevin Kotler’s Broadfin Capital sold off the largest investment of the 700 funds followed by Insider Monkey, comprising close to $6.3 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $3.6 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as AngioDynamics, Inc. (NASDAQ:ANGO) but similarly valued. These stocks are eHealth, Inc. (NASDAQ:EHTH), S.Y. Bancorp, Inc. (NASDAQ:SYBT), Compass Diversified Holdings LLC (NYSE:CODI), and Revance Therapeutics Inc (NASDAQ:RVNC). All of these stocks’ market caps are similar to ANGO’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 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $47 million in ANGO’s case. eHealth, Inc. (NASDAQ:EHTH) is the most popular stock in this table. On the other hand Compass Diversified Holdings LLC (NYSE:CODI) is the least popular one with only 4 bullish hedge fund positions. AngioDynamics, Inc. (NASDAQ:ANGO) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ANGO wasn’t nearly as popular as these 15 stock and hedge funds that were betting on ANGO were disappointed as the stock returned -0.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.