Is INFU A Good Stock To Buy Now?

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 InfuSystem Holdings, Inc. (NYSE:INFU) to find out whether there were any major changes in hedge funds’ views.

Is INFU a good stock to buy now? The smart money was becoming hopeful. The number of long hedge fund positions inched up by 6 lately. InfuSystem Holdings, Inc. (NYSE:INFU) was in 12 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that INFU 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Roger Ibbotson of Zebra Capital Management

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 take a peek at the new hedge fund action regarding InfuSystem Holdings, Inc. (NYSE:INFU).

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

At the end of September, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards INFU over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

The largest stake in InfuSystem Holdings, Inc. (NYSE:INFU) was held by Minerva Advisors, which reported holding $20.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $7.1 million position. Other investors bullish on the company included Parkman Healthcare Partners, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to InfuSystem Holdings, Inc. (NYSE:INFU), around 13.56% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, dishing out 0.79 percent of its 13F equity portfolio to INFU.

As industrywide interest jumped, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the largest position in InfuSystem Holdings, Inc. (NYSE:INFU). Millennium Management had $0.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new INFU investors: Roger Ibbotson’s Zebra Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as InfuSystem Holdings, Inc. (NYSE:INFU) but similarly valued. We will take a look at Invacare Corporation (NYSE:IVC), BBX Capital Corporation (NYSE:BBX), CECO Environmental Corp. (NASDAQ:CECE), RADA Electronic Industries Ltd. (NASDAQ:RADA), GasLog Ltd (NYSE:GLOG), Citizens & Northern Corporation (NASDAQ:CZNC), and Uxin Limited (NASDAQ:UXIN). All of these stocks’ market caps are similar to INFU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IVC 17 60394 -1
BBX 9 17576 -2
CECE 10 48633 2
RADA 7 16874 0
GLOG 7 6550 -6
CZNC 4 3884 2
UXIN 5 2779 3
Average 8.4 22384 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.4 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $34 million in INFU’s case. Invacare Corporation (NYSE:IVC) is the most popular stock in this table. On the other hand Citizens & Northern Corporation (NASDAQ:CZNC) is the least popular one with only 4 bullish hedge fund positions. InfuSystem Holdings, Inc. (NYSE:INFU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INFU is 70.8. 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 INFU as the stock returned 33.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Infusystem Holdings Inc (NYSEMKT:INFU)

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