The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards NuVasive, Inc. (NASDAQ:NUVA) , and what that likely means for the prospects of the company and its stock.
NuVasive, Inc. (NASDAQ:NUVA) investors should be aware of an increase in enthusiasm from smart money in recent months. At the end of this article, we will also compare NuVasive, Inc. (NASDAQ:NUVA) to other stocks, including HRG Group Inc (NYSE:HRG), Laclede Group Inc (NYSE:LG), and Cantel Medical Corp. (NYSE:CMN) to get a better sense of its popularity.
To most investors, hedge funds are assumed to be underperforming, outdated investment tools of yesteryear. While there are over 8000 funds in operation at the moment, We choose to focus on the bigwigs of this club, about 700 funds. These investment experts handle the bulk of the smart money’s total capital, and by monitoring their best picks, Insider Monkey has figured out a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, we’re going to view the recent action regarding NuVasive, Inc. (NASDAQ:NUVA).
What does the smart money think about NuVasive, Inc. (NASDAQ:NUVA)?
At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 3% from the second quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in NuVasive, Inc. (NASDAQ:NUVA). Millennium Management has a $83.9 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Blue Mountain Capital, led by Andrew Feldstein and Stephen Siderow, holding a $80.1 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Samuel Isaly’s OrbiMed Advisors, Ken Fisher’s Fisher Asset Management, and Anand Parekh’s Alyeska Investment Group.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Paul Marshall and Ian Wace’s Marshall Wace LLP initiated a $2.6 million position during the quarter. The other funds with brand new NuVasive, Inc. (NASDAQ:NUVA) positions are Chao Ku’s Nine Chapters Capital Management, Hal Mintz’s Sabby Capital, and Justin John Ferayorni’s Tamarack Capital Management.
Let’s go over 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 HRG Group Inc (NYSE:HRG), Laclede Group Inc (NYSE:LG), Cantel Medical Corp. (NYSE:CMN), and Churchill Downs, Inc. (NASDAQ:CHDN). This group of stocks’ market values resembles NuVasive, Inc. (NASDAQ:NUVA)’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $663 million. That figure was $622 million in NuVasive, Inc. (NASDAQ:NUVA)’s case. HRG Group Inc (NYSE:HRG) is the most popular stock in this table. On the other hand, Cantel Medical Corp. (NYSE:CMN) is the least popular one with only 6 bullish hedge fund positions. 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.