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Is BioTelemetry, Inc. (BEAT) A Good Stock To Buy?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of BioTelemetry, Inc. (NASDAQ:BEAT) based on that data and determine whether they were really smart about the stock.

BioTelemetry, Inc. (NASDAQ:BEAT) has seen a decrease in hedge fund sentiment lately. BEAT was in 12 hedge funds’ portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with BEAT holdings at the end of the previous quarter. Our calculations also showed that BEAT isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In today’s marketplace there are several formulas investors put to use to value publicly traded companies. A couple of the most useful formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outclass the broader indices by a superb margin (see the details here).

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the key hedge fund action encompassing BioTelemetry, Inc. (NASDAQ:BEAT).

Hedge fund activity in BioTelemetry, Inc. (NASDAQ:BEAT)

At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the fourth quarter of 2019. On the other hand, there were a total of 21 hedge funds with a bullish position in BEAT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in BioTelemetry, Inc. (NASDAQ:BEAT) was held by Royce & Associates, which reported holding $9.6 million worth of stock at the end of September. It was followed by GLG Partners with a $7.7 million position. Other investors bullish on the company included Ancora Advisors, Millennium Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position DAFNA Capital Management allocated the biggest weight to BioTelemetry, Inc. (NASDAQ:BEAT), around 0.97% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, earmarking 0.29 percent of its 13F equity portfolio to BEAT.

Since BioTelemetry, Inc. (NASDAQ:BEAT) has witnessed declining sentiment from the smart money, we can see that there exists a select few fund managers who were dropping their full holdings last quarter. It’s worth mentioning that Michael Castor’s Sio Capital sold off the largest stake of all the hedgies tracked by Insider Monkey, totaling close to $7.4 million in stock, and Brian C. Freckmann’s Lyon Street Capital was right behind this move, as the fund sold off about $1.4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BioTelemetry, Inc. (NASDAQ:BEAT) but similarly valued. We will take a look at Office Properties Income Trust (NASDAQ:OPI), Constellation Pharmaceuticals, Inc. (NASDAQ:CNST), RLJ Lodging Trust (NYSE:RLJ), and Stitch Fix, Inc. (NASDAQ:SFIX). This group of stocks’ market caps are similar to BEAT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OPI 10 20479 1
CNST 25 427184 -2
RLJ 20 55694 3
SFIX 16 79738 -12
Average 17.75 145774 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $43 million in BEAT’s case. Constellation Pharmaceuticals, Inc. (NASDAQ:CNST) is the most popular stock in this table. On the other hand Office Properties Income Trust (NASDAQ:OPI) is the least popular one with only 10 bullish hedge fund positions. BioTelemetry, Inc. (NASDAQ:BEAT) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately BEAT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BEAT investors were disappointed as the stock returned 17.3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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