Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the fourth quarter, many investors lost money due to unpredictable events such as the sudden increase in long-term interest rates and unintended consequences of the trade war with China. Nevertheless, many of the stocks that tanked in the fourth quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Stratasys, Ltd. (NASDAQ:SSYS) changed recently.
Hedge fund interest in Stratasys, Ltd. (NASDAQ:SSYS) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as 21Vianet Group Inc (NASDAQ:VNET), Bluegreen Vacations Corporation (NYSE:BXG), and Gannett Co., Inc. (NYSE:GCI) to gather more data points.
At the moment there are several formulas stock traders put to use to value stocks. Some of the best formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the market by a healthy amount (see the details here).
Let’s review the key hedge fund action encompassing Stratasys, Ltd. (NASDAQ:SSYS).
Hedge fund activity in Stratasys, Ltd. (NASDAQ:SSYS)
At Q4’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SSYS over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Stratasys, Ltd. (NASDAQ:SSYS) was held by Fisher Asset Management, which reported holding $50.7 million worth of stock at the end of December. It was followed by GAMCO Investors with a $9.5 million position. Other investors bullish on the company included Royce & Associates, Millennium Management, and Renaissance Technologies.
Because Stratasys, Ltd. (NASDAQ:SSYS) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few fund managers who sold off their positions entirely in the third quarter. Interestingly, Philippe Laffont’s Coatue Management dumped the largest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $10.6 million in stock. Prem Watsa’s fund, Fairfax Financial Holdings, also dumped its stock, about $1.8 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Stratasys, Ltd. (NASDAQ:SSYS). We will take a look at 21Vianet Group Inc (NASDAQ:VNET), Bluegreen Vacations Corporation (NYSE:BXG), Gannett Co., Inc. (NYSE:GCI), and MGP Ingredients Inc (NASDAQ:MGPI). This group of stocks’ market caps resemble SSYS’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 11 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $98 million in SSYS’s case. 21Vianet Group Inc (NASDAQ:VNET) is the most popular stock in this table. On the other hand Bluegreen Vacations Corporation (NYSE:BXG) is the least popular one with only 2 bullish hedge fund positions. Stratasys, Ltd. (NASDAQ:SSYS) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on SSYS as the stock returned 31.6% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.