Is ATEC A Good Stock To Buy Now?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Alphatec Holdings Inc (NASDAQ:ATEC).

Is ATEC a good stock to buy now? Alphatec Holdings Inc (NASDAQ:ATEC) investors should pay attention to an increase in hedge fund sentiment lately. Alphatec Holdings Inc (NASDAQ:ATEC) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 15. Our calculations also showed that ATEC 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.

Today there are tons of tools stock market investors have at their disposal to grade publicly traded companies. A duo of the less utilized tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outclass the S&P 500 by a significant margin (see the details here).

Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive Advisors

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 let’s take a look at the fresh hedge fund action surrounding Alphatec Holdings Inc (NASDAQ:ATEC).

Do Hedge Funds Think ATEC Is A Good Stock To Buy Now?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ATEC over the last 21 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Driehaus Capital, managed by Richard Driehaus, holds the biggest position in Alphatec Holdings Inc (NASDAQ:ATEC). Driehaus Capital has a $11.8 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Constantinos J. Christofilis of Archon Capital Management, with a $8.9 million position; 1.8% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions encompass Chuck Royce’s Royce & Associates, Zachary Miller’s Parian Global Management and Joseph Edelman’s Perceptive Advisors. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Alphatec Holdings Inc (NASDAQ:ATEC), around 1.8% of its 13F portfolio. Parian Global Management is also relatively very bullish on the stock, dishing out 1.64 percent of its 13F equity portfolio to ATEC.

As aggregate interest increased, key money managers have jumped into Alphatec Holdings Inc (NASDAQ:ATEC) headfirst. Parian Global Management, managed by Zachary Miller, created the most valuable position in Alphatec Holdings Inc (NASDAQ:ATEC). Parian Global Management had $5.2 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Alphatec Holdings Inc (NASDAQ:ATEC) but similarly valued. These stocks are Star Group L.P. (NYSE:SGU), Tribune Publishing Company (NASDAQ:TPCO), Viad Corp (NYSE:VVI), UroGen Pharma Ltd. (NASDAQ:URGN), Lands’ End, Inc. (NASDAQ:LE), Sabine Royalty Trust (NYSE:SBR), and Lindblad Expeditions Holdings Inc (NASDAQ:LIND). This group of stocks’ market caps match ATEC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SGU 9 81549 -2
TPCO 13 151012 -2
VVI 15 65128 0
URGN 4 26840 -1
LE 9 68018 -3
SBR 7 14145 2
LIND 16 48635 -2
Average 10.4 65047 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $43 million in ATEC’s case. Lindblad Expeditions Holdings Inc (NASDAQ:LIND) is the most popular stock in this table. On the other hand UroGen Pharma Ltd. (NASDAQ:URGN) is the least popular one with only 4 bullish hedge fund positions. Alphatec Holdings Inc (NASDAQ:ATEC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATEC is 69.5. 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 gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ATEC as the stock returned 82.5% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.