We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards On Track Innovations Ltd. (USA) (NASDAQ:OTIV).
Is On Track Innovations Ltd. (USA) (NASDAQ:OTIV) the right pick for your portfolio? The best stock pickers are in a bullish mood. The number of bullish hedge fund positions increased by 1 recently. 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 Cogentix Medical Inc (NASDAQ:CGNT), Summer Infant, Inc. (NASDAQ:SUMR), and RMG Networks Holding Corporation (NASDAQ:RMGN) to gather more data points.
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At the moment, there are a large number of metrics investors employ to evaluate stocks. A duo of the most innovative metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best money managers can outclass the S&P 500 by a significant margin (see the details here).
Keeping this in mind, let’s view the latest action encompassing On Track Innovations Ltd.(USA) (NASDAQ:OTIV).
How are hedge funds trading On Track Innovations Ltd.(USA) (NASDAQ:OTIV)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 33% from the second quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Joseph A. Jolson’s Harvest Capital Strategies has the largest position in On Track Innovations Ltd. (USA) (NASDAQ:OTIV), worth close to $2.1 million, accounting for 0.4% of its total 13F portfolio. On Harvest Capital Strategies’s heels is Prescott Group Capital Management, led by Phil Frohlich, holding a $0.3 million position; 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism consist of Renaissance Technologies, and Ken Griffin’s Citadel Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into On Track Innovations Ltd.(USA) (NASDAQ:OTIV) headfirst. Renaissance Technologies established the biggest position in On Track Innovations Ltd. (USA) (NASDAQ:OTIV). Renaissance Technologies had $28,000 invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to On Track Innovations Ltd. (USA) (NASDAQ:OTIV). These stocks are Cogentix Medical Inc (NASDAQ:CGNT), Summer Infant, Inc. (NASDAQ:SUMR), RMG Networks Holding Corporation (NASDAQ:RMGN), and Broadwind Energy Inc. (NASDAQ:BWEN). This group of stocks’ market valuations resembles On Track Innovations Ltd. (USA) (NASDAQ:OTIV)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CGNT | 8 | 6588 | 0 |
| SUMR | 6 | 8188 | 1 |
| RMGN | 5 | 4032 | 0 |
| BWEN | 4 | 4128 | -2 |
As you can see, these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $2 million in On Track Innovations Ltd. (USA) (NASDAQ:OTIV)’s case. Cogentix Medical Inc (NASDAQ:CGNT) is the most popular stock in this table. On the other hand, Broadwind Energy Inc. (NASDAQ:BWEN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, On Track Innovations Ltd.(USA) (NASDAQ:OTIV) is even less popular than Broadwind Energy Inc. (NASDAQ:BWEN). 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.