Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Accuray Incorporated (NASDAQ:ARAY) to find out whether there were any major changes in hedge funds’ views.
Is ARAY a good stock to buy now? Accuray Incorporated (NASDAQ:ARAY) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Accuray Incorporated (NASDAQ:ARAY) was in 16 hedge funds’ portfolios at the end of September. The all time high for this statistic is 20. There were 14 hedge funds in our database with ARAY holdings at the end of June. Our calculations also showed that ARAY 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.
If you’d ask most investors, hedge funds are assumed to be underperforming, outdated investment tools of yesteryear. While there are over 8000 funds trading today, Our experts choose to focus on the top tier of this club, approximately 850 funds. These investment experts preside over the lion’s share of the smart money’s total capital, and by watching their unrivaled equity investments, Insider Monkey has determined various investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. Keeping this in mind we’re going to check out the recent hedge fund action encompassing Accuray Incorporated (NASDAQ:ARAY).
Do Hedge Funds Think ARAY 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 held long positions in this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in ARAY a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Accuray Incorporated (NASDAQ:ARAY) was held by Archon Capital Management, which reported holding $10.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $10.1 million position. Other investors bullish on the company included D E Shaw, Royce & Associates, and DAFNA Capital Management. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Accuray Incorporated (NASDAQ:ARAY), around 2.12% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, earmarking 0.84 percent of its 13F equity portfolio to ARAY.
Now, key money managers have been driving this bullishness. Tudor Investment Corp, managed by Paul Tudor Jones, initiated the largest position in Accuray Incorporated (NASDAQ:ARAY). Tudor Investment Corp had $0.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.1 million position during the quarter. The only other fund with a brand new ARAY position is Peter Algert’s Algert Global.
Let’s check out hedge fund activity in other stocks similar to Accuray Incorporated (NASDAQ:ARAY). These stocks are Home Bancorp, Inc. (NASDAQ:HBCP), National CineMedia, Inc. (NASDAQ:NCMI), Kaleyra, Inc. (NASDAQ:KLR), Lightinthebox Holding Co Ltd (NYSE:LITB), Ideanomics, Inc. (NASDAQ:IDEX), Southern Missouri Bancorp, Inc. (NASDAQ:SMBC), and CapStar Financial Holdings, Inc. (NASDAQ:CSTR). All of these stocks’ market caps resemble ARAY’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 6.1 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $41 million in ARAY’s case. Kaleyra, Inc. (NASDAQ:KLR) is the most popular stock in this table. On the other hand Home Bancorp, Inc. (NASDAQ:HBCP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Accuray Incorporated (NASDAQ:ARAY) is more popular among hedge funds. Our overall hedge fund sentiment score for ARAY is 81. 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. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on ARAY as the stock returned 85.4% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.