While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Senseonics Holdings, Inc. (NYSE:SENS).
Is SENS a good stock to buy now? Prominent investors were taking a pessimistic view. The number of bullish hedge fund bets went down by 2 recently. Senseonics Holdings, Inc. (NYSE:SENS) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. Our calculations also showed that SENS 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.
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. With all of this in mind we’re going to review the latest hedge fund action encompassing Senseonics Holdings, Inc. (NYSE:SENS).
Do Hedge Funds Think SENS Is A Good Stock To Buy Now?
At the end of September, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SENS over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mike Masters’s Masters Capital Management has the number one position in Senseonics Holdings, Inc. (NYSE:SENS), worth close to $0.8 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Endurant Capital Management, managed by Vishal Saluja and Pham Quang, which holds a $0.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Israel Englander’s Millennium Management, Michael Gelband’s ExodusPoint Capital and Sander Gerber’s Hudson Bay Capital Management. In terms of the portfolio weights assigned to each position Endurant Capital Management allocated the biggest weight to Senseonics Holdings, Inc. (NYSE:SENS), around 0.2% of its 13F portfolio. Masters Capital Management is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to SENS.
Due to the fact that Senseonics Holdings, Inc. (NYSE:SENS) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers who were dropping their full holdings in the third quarter. At the top of the heap, Highbridge Capital Management said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, worth close to $0.4 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dumped about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Senseonics Holdings, Inc. (NYSE:SENS) but similarly valued. These stocks are EMCORE Corporation (NASDAQ:EMKR), Tarena International Inc (NASDAQ:TEDU), Newpark Resources Inc (NYSE:NR), Crexendo, Inc. (NASDAQ:CXDO), Catalyst Biosciences Inc (NASDAQ:CBIO), Marchex, Inc. (NASDAQ:MCHX), and Greenlane Holdings, Inc. (NASDAQ:GNLN). This group of stocks’ market valuations are similar to SENS’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $2 million in SENS’s case. Catalyst Biosciences Inc (NASDAQ:CBIO) is the most popular stock in this table. On the other hand Tarena International Inc (NASDAQ:TEDU) is the least popular one with only 2 bullish hedge fund positions. Senseonics Holdings, Inc. (NYSE:SENS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SENS is 49.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 16.2 percentage points. Unfortunately SENS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SENS were disappointed as the stock returned 3.4% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.