Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Cytosorbents Corporation (NASDAQ:CTSO).
Cytosorbents Corporation (NASDAQ:CTSO) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that CTSO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are seen as underperforming, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts hone in on the aristocrats of this club, about 750 funds. It is estimated that this group of investors preside over the majority of the hedge fund industry’s total asset base, and by tailing their inimitable investments, Insider Monkey has identified several investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Matthew Hulsizer of PEAK6 Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to check out the new hedge fund action surrounding Cytosorbents Corporation (NASDAQ:CTSO).
What does smart money think about Cytosorbents Corporation (NASDAQ:CTSO)?
Heading into the fourth quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in CTSO a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Skylands Capital held the most valuable stake in Cytosorbents Corporation (NASDAQ:CTSO), which was worth $3.9 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $0.5 million worth of shares. Winton Capital Management, AQR Capital Management, and PEAK6 Capital Management 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 Skylands Capital allocated the biggest weight to Cytosorbents Corporation (NASDAQ:CTSO), around 0.57% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.0015 percent of its 13F equity portfolio to CTSO.
Consequently, some big names have been driving this bullishness. Winton Capital Management, managed by David Harding, created the biggest position in Cytosorbents Corporation (NASDAQ:CTSO). Winton Capital Management had $0.1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Cytosorbents Corporation (NASDAQ:CTSO). These stocks are LiqTech International Inc (NASDAQ:LIQT), Titan International Inc (NYSE:TWI), Tile Shop Holdings, Inc. (NASDAQ:TTS), and TuanChe Limited (NASDAQ:TC). This group of stocks’ market caps resemble CTSO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LIQT | 8 | 7582 | 3 |
| TWI | 9 | 41210 | -1 |
| TTS | 10 | 7226 | -2 |
| TC | 1 | 34 | -1 |
| Average | 7 | 14013 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $5 million in CTSO’s case. Tile Shop Holdings, Inc. (NASDAQ:TTS) is the most popular stock in this table. On the other hand TuanChe Limited (NASDAQ:TC) is the least popular one with only 1 bullish hedge fund positions. Cytosorbents Corporation (NASDAQ:CTSO) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CTSO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CTSO investors were disappointed as the stock returned -20.7% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
