Is Alphatec Holdings Inc (NASDAQ:ATEC) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Alphatec Holdings Inc shareholders have witnessed a decrease in support from the world’s most elite money managers recently. ATEC was in 4 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with ATEC positions at the end of the previous quarter. At the end of this article we will also compare ATEC to other stocks, including Dover Downs Gaming & Entertainment, Inc. (NYSE:DDE), On Track Innovations Ltd.(USA) (NASDAQ:OTIV), and Cogentix Medical Inc (NASDAQ:CGNT) to get a better sense of its popularity.
If you’d ask most stock holders, hedge funds are viewed as unimportant, outdated financial vehicles of the past. While there are over 8000 funds with their doors open at the moment, we look at the leaders of this club, about 700 funds. These investment experts administer the lion’s share of all hedge funds’ total capital, and by monitoring their unrivaled picks, Insider Monkey has deciphered numerous investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, we’re going to take a look at the fresh action surrounding Alphatec Holdings Inc (NASDAQ:ATEC).
What does the smart money think about Alphatec Holdings Inc (NASDAQ:ATEC)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 33% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Stepstone Group, managed by Jose Fernandez, holds the largest position in Alphatec Holdings Inc (NASDAQ:ATEC). The fund reportedly holds a $1.9 million position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Deerfield Management, led by James E. Flynn, holding a $1.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish comprise Jim Simons’s Renaissance Technologies, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.
Since Alphatec Holdings Inc (NASDAQ:ATEC) has witnessed falling interest from the smart money, we can see that there lies a certain “tier” of hedge funds that slashed their full holdings by the end of the third quarter. Interestingly, Israel Englander’s Millennium Management cut the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $40,000 in stock, and Ken Griffin of Citadel Investment Group was right behind this move, as the fund dumped about $18,000 worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Alphatec Holdings Inc (NASDAQ:ATEC) but similarly valued. We will take a look at Dover Downs Gaming & Entertainment, Inc. (NYSE:DDE), On Track Innovations Ltd.(USA) (NASDAQ:OTIV), Cogentix Medical Inc (NASDAQ:CGNT), and Summer Infant, Inc. (NASDAQ:SUMR). This group of stocks’ market valuations are closest to ATEC’s market valuation.
|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 6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $4 million in ATEC’s case, which is not a positive sign. Cogentix Medical Inc (NASDAQ:CGNT) is the most popular stock in this table, while Dover Downs Gaming & Entertainment, Inc. (NYSE:DDE) is the least popular one with only 4 bullish hedge fund positions. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.