Is NuVasive, Inc. (NUVA) a Good Stock To Buy?

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we will analyze NuVasive, Inc. (NASDAQ:NUVA) from the perspective of those elite funds.

So, is NuVasive, Inc. (NASDAQ:NUVA) a bargain? The smart money seems to be taking a bearish view, since the number of bullish hedge fund positions was trimmed by two in recent months. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Two Harbors Investment Corp (NYSE:TWO), Black Stone Minerals LP (NYSE:BSM), and Integra Lifesciences Holdings Corp (NASDAQ:IART) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

With all of this in mind, let’s take a look at the fresh action encompassing NuVasive, Inc. (NASDAQ:NUVA).

How are hedge funds trading NuVasive, Inc. (NASDAQ:NUVA)?

At Q3’s end, 27 funds tracked by Insider Monkey held long positions in this stock, down by 7% over the quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the largest position in NuVasive, Inc. (NASDAQ:NUVA), worth close to $94.8 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Columbus Circle Investors, managed by Principal Global Investors, which holds a $49.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Anand Parekh’s Alyeska Investment Group, Ken Griffin’s Citadel Investment Group, and Nick Niell’s Arrowgrass Capital Partners.

Judging by the fact that NuVasive, Inc. (NASDAQ:NUVA) has witnessed a decline in interest from hedge fund managers, we can see that there is a sect of funds who sold off their full holdings in the third quarter. Interestingly, Stephen DuBois’ Camber Capital Management cut the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $44.8 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund said goodbye to about $14.5 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as NuVasive, Inc. (NASDAQ:NUVA) but similarly valued. We will take a look at Two Harbors Investment Corp (NYSE:TWO), Black Stone Minerals LP (NYSE:BSM), Integra Lifesciences Holdings Corp (NASDAQ:IART), and Urban Edge Properties (NYSE:UE). This group of stocks’ market valuations are similar to NUVA’s market valuation.

As you can see these stocks had an average of 14 funds with bullish positions and the average amount invested in these stocks was $70 million, which compares with a $382 million figure in NUVA’s case. Two Harbors Investment Corp (NYSE:TWO) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only seven investors holding shares. Compared to these stocks NuVasive, Inc. (NASDAQ:NUVA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.