Is Align Technology, Inc. (ALGN) a Good Buy?

Since Align Technology, Inc. (NASDAQ:ALGN) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few money managers who sold off their full holdings last quarter. Interestingly, James Crichton’s Hitchwood Capital Management sold off the biggest investment of all the hedgies monitored by Insider Monkey, comprising an estimated $75.3 million in stock, and Columbus Circle Investors was right behind this move, as the fund cut about $26 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Align Technology, Inc. (NASDAQ:ALGN) but similarly valued. We will take a look at Ares Capital Corporation (NASDAQ:ARCC), Servicemaster Global Holdings Inc (NYSE:SERV), Gentex Corporation (NASDAQ:GNTX), and Pandora Media Inc (NYSE:P). This group of stocks’ market values resemble ALGN’s market value.

As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $577 million. That figure was $325 million in ALGN’s case. Pandora Media Inc (NYSE:P) is the most popular stock in this table. On the other hand Ares Capital Corporation (NASDAQ:ARCC) is the least popular one with only 23 bullish hedge fund positions. Align Technology, Inc. (NASDAQ:ALGN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard P might be a better candidate to consider a long position.