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Are Hedge Funds Crazy About Mazor Robotics As US$1.64B Medtronic Merger Inches Closer?

We can judge whether Mazor Robotics Ltd – ADR (NASDAQ:MZOR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.

Is Mazor Robotics Ltd – ADR a cheap investment right now? Money managers are getting more bullish. The number of long hedge fund bets increased by 2 in recent months. Our calculations also showed that Mazor isn’t among the 30 most popular stocks among hedge funds. MZOR was in 8 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with MZOR holdings at the end of the previous quarter.

In the financial world, there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Mario Gabelli

Mazor Robotics said that its shareholders recently approved the previously announced  $1.6 billion merger with wholly-owned subsidiaries of Medtronic plc (NYSE: MDT).

Hedge fund activity in Mazor Robotics Ltd – ADR (NASDAQ:MZOR)

At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MZOR over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with MZOR Positions

More specifically, Citadel Investment Group was the largest shareholder of Mazor Robotics Ltd – ADR (NASDAQ:MZOR), with a stake worth $4.8 million reported as of the end of September. Trailing Citadel Investment Group was Citadel Investment Group, which amassed a stake valued at $3.1 million. Marshall Wace LLP, GAMCO Investors, and Water Island Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers have been driving this bullishness. GAMCO Investors, managed by Mario Gabelli, created the largest position in Mazor Robotics Ltd – ADR (NASDAQ:MZOR). GAMCO Investors had $2.1 million invested in the company at the end of the quarter. John Orrico’s Water Island Capital also made a $1.3 million investment in the stock during the quarter. The other funds with brand new MZOR positions are Israel Englander’s Millennium Management and Frederick DiSanto’s Ancora Advisors.

Let’s also examine hedge fund activity in other stocks similar to Mazor Robotics Ltd – ADR (NASDAQ:MZOR). These stocks are Badger Meter, Inc. (NYSE:BMI), Criteo SA (NASDAQ:CRTO), Rush Enterprises, Inc. (NASDAQ:RUSHA), and TherapeuticsMD Inc (NASDAQ:TXMD). This group of stocks’ market valuations are closest to MZOR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BMI 9 107161 3
CRTO 11 176343 3
RUSHA 20 150213 1
TXMD 14 76456 6
Average 13.5 127543 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $11 million in MZOR’s case. Rush Enterprises, Inc. (NASDAQ:RUSHA) is the most popular stock in this table. On the other hand Badger Meter, Inc. (NYSE:BMI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Mazor Robotics Ltd – ADR (NASDAQ:MZOR) is even less popular than BMI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

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