In this article we will check out the progression of hedge fund sentiment towards Acutus Medical, Inc. (NASDAQ:AFIB) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is AFIB a good stock to buy now? Hedge funds were becoming hopeful. The number of bullish hedge fund positions inched up by 16 lately. Acutus Medical, Inc. (NASDAQ:AFIB) was in 16 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that AFIB 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 15 best blue chip stocks 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. Now we’re going to review the fresh hedge fund action surrounding Acutus Medical, Inc. (NASDAQ:AFIB).
Do Hedge Funds Think AFIB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16 from the second quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in AFIB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, OrbiMed Advisors, holds the most valuable position in Acutus Medical, Inc. (NASDAQ:AFIB). OrbiMed Advisors has a $163.2 million position in the stock, comprising 2.1% of its 13F portfolio. The second largest stake is held by James E. Flynn of Deerfield Management, with a $129.4 million position; 3.2% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions consist of James A. Silverman’s Opaleye Management, Efrem Kamen’s Pura Vida Investments and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management. In terms of the portfolio weights assigned to each position Opaleye Management allocated the biggest weight to Acutus Medical, Inc. (NASDAQ:AFIB), around 4.37% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, designating 3.15 percent of its 13F equity portfolio to AFIB.
As industrywide interest jumped, some big names were breaking ground themselves. OrbiMed Advisors, assembled the biggest position in Acutus Medical, Inc. (NASDAQ:AFIB). OrbiMed Advisors had $163.2 million invested in the company at the end of the quarter. James E. Flynn’s Deerfield Management also made a $129.4 million investment in the stock during the quarter. The other funds with new positions in the stock are James A. Silverman’s Opaleye Management, Efrem Kamen’s Pura Vida Investments, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.
Let’s go over hedge fund activity in other stocks similar to Acutus Medical, Inc. (NASDAQ:AFIB). We will take a look at QAD Inc. (NASDAQ:QADA), OceanFirst Financial Corp. (NASDAQ:OCFC), Johnson Outdoors Inc. (NASDAQ:JOUT), Granite Construction Incorporated (NYSE:GVA), Archrock, Inc. (NYSE:AROC), Delek US Holdings, Inc. (NYSE:DK), and Mobileiron Inc (NASDAQ:MOBL). This group of stocks’ market caps resemble AFIB’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 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $366 million in AFIB’s case. Mobileiron Inc (NASDAQ:MOBL) is the most popular stock in this table. On the other hand Archrock, Inc. (NYSE:AROC) is the least popular one with only 10 bullish hedge fund positions. Acutus Medical, Inc. (NASDAQ:AFIB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AFIB is 42. 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. 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 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately AFIB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AFIB were disappointed as the stock returned -1.1% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.