In this article we will check out the progression of hedge fund sentiment towards SI-BONE, Inc. (NASDAQ:SIBN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is SIBN a good stock to buy? Money managers were turning bullish. The number of bullish hedge fund positions went up by 3 lately. SI-BONE, Inc. (NASDAQ:SIBN) was in 19 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SIBN 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). There were 16 hedge funds in our database with SIBN positions at the end of the second quarter.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Keeping this in mind let’s analyze the fresh hedge fund action regarding SI-BONE, Inc. (NASDAQ:SIBN).
Do Hedge Funds Think SIBN Is A Good Stock To Buy Now?
At third quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SIBN over the last 21 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, OrbiMed Advisors held the most valuable stake in SI-BONE, Inc. (NASDAQ:SIBN), which was worth $32.5 million at the end of the third quarter. On the second spot was Millennium Management which amassed $27.5 million worth of shares. Driehaus Capital, Parian Global Management, and Endurant Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Parian Global Management allocated the biggest weight to SI-BONE, Inc. (NASDAQ:SIBN), around 4.59% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, setting aside 3.25 percent of its 13F equity portfolio to SIBN.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Parian Global Management, managed by Zachary Miller, created the biggest position in SI-BONE, Inc. (NASDAQ:SIBN). Parian Global Management had $14.5 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also initiated a $6.1 million position during the quarter. The following funds were also among the new SIBN investors: Michael Gelband’s ExodusPoint Capital, Greg Eisner’s Engineers Gate Manager, and David Harding’s Winton Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SI-BONE, Inc. (NASDAQ:SIBN) but similarly valued. We will take a look at Core Laboratories N.V. (NYSE:CLB), Inhibrx, Inc. (NASDAQ:INBX), TCR2 Therapeutics Inc. (NASDAQ:TCRR), Brookfield Property REIT Inc. (NASDAQ:BPYU), Kelly Services, Inc. (NASDAQ:KELYA), Unisys Corporation (NYSE:UIS), and MGP Ingredients Inc (NASDAQ:MGPI). All of these stocks’ market caps match SIBN’s market cap.
|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 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $163 million in SIBN’s case. Core Laboratories N.V. (NYSE:CLB) is the most popular stock in this table. On the other hand Kelly Services, Inc. (NASDAQ:KELYA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks SI-BONE, Inc. (NASDAQ:SIBN) is more popular among hedge funds. Our overall hedge fund sentiment score for SIBN is 88. 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. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Unfortunately SIBN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SIBN were disappointed as the stock returned 8.6% since the end of the third quarter (through 12/14) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.