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 CryoPort, Inc. (NASDAQ:CYRX) to find out whether there were any major changes in hedge funds’ views.
Is CYRX a good stock to buy? Investors who are in the know were in a bullish mood. The number of long hedge fund positions improved by 7 in recent months. CryoPort, Inc. (NASDAQ:CYRX) was in 19 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 12. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CYRX 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). There were 12 hedge funds in our database with CYRX holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 glance at the fresh hedge fund action regarding CryoPort, Inc. (NASDAQ:CYRX).
Do Hedge Funds Think CYRX Is A Good Stock To Buy Now?
At third quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 58% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in CYRX a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Select Equity Group was the largest shareholder of CryoPort, Inc. (NASDAQ:CYRX), with a stake worth $66.9 million reported as of the end of September. Trailing Select Equity Group was D E Shaw, which amassed a stake valued at $19.5 million. Ikarian Capital, Renaissance Technologies, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ratan Capital Group allocated the biggest weight to CryoPort, Inc. (NASDAQ:CYRX), around 1.4% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, setting aside 1.33 percent of its 13F equity portfolio to CYRX.
As aggregate interest increased, key money managers were breaking ground themselves. Select Equity Group, managed by Robert Joseph Caruso, created the biggest position in CryoPort, Inc. (NASDAQ:CYRX). Select Equity Group had $66.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $12.3 million position during the quarter. The other funds with new positions in the stock are Nehal Chopra’s Ratan Capital Group, Richard Driehaus’s Driehaus Capital, and Pasco Alfaro and Richard Turnure’s Miura Global Management.
Let’s now review hedge fund activity in other stocks similar to CryoPort, Inc. (NASDAQ:CYRX). These stocks are Eldorado Gold Corp (NYSE:EGO), Avis Budget Group Inc. (NASDAQ:CAR), ServisFirst Bancshares, Inc. (NASDAQ:SFBS), Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL), Sanmina Corporation (NASDAQ:SANM), Rogers Corporation (NYSE:ROG), and Prestige Consumer Healthcare Inc. (NYSE:PBH). This group of stocks’ market values resemble CYRX’s market value.
|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 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $274 million. That figure was $163 million in CYRX’s case. Avis Budget Group Inc. (NASDAQ:CAR) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is the least popular one with only 8 bullish hedge fund positions. CryoPort, Inc. (NASDAQ:CYRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CYRX is 61.2. 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 CYRX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CYRX were disappointed as the stock returned 4.3% 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.
Disclosure: None. This article was originally published at Insider Monkey.