While the market driven by short-term sentiment influenced by the accommodative 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 Stratasys, Ltd. (NASDAQ:SSYS).
Is SSYS a good stock to buy now? Stratasys, Ltd. (NASDAQ:SSYS) investors should be aware of a decrease in enthusiasm from smart money in recent months. Stratasys, Ltd. (NASDAQ:SSYS) was in 16 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. There were 19 hedge funds in our database with SSYS holdings at the end of June. Our calculations also showed that SSYS 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. Keeping this in mind we’re going to review the fresh hedge fund action surrounding Stratasys, Ltd. (NASDAQ:SSYS).
Do Hedge Funds Think SSYS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in SSYS a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Constantinos J. Christofilis’s Archon Capital Management has the most valuable position in Stratasys, Ltd. (NASDAQ:SSYS), worth close to $10.5 million, comprising 2.1% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $10.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions encompass Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Mario Gabelli’s GAMCO Investors. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Stratasys, Ltd. (NASDAQ:SSYS), around 2.12% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, earmarking 0.32 percent of its 13F equity portfolio to SSYS.
Since Stratasys, Ltd. (NASDAQ:SSYS) has faced a decline in interest from the smart money, logic holds that there exists a select few hedgies that slashed their positions entirely in the third quarter. At the top of the heap, Ken Fisher’s Fisher Asset Management sold off the biggest investment of the 750 funds watched by Insider Monkey, worth about $34.1 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dumped its stock, about $1.9 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Stratasys, Ltd. (NASDAQ:SSYS) but similarly valued. We will take a look at Echo Global Logistics, Inc. (NASDAQ:ECHO), Great Western Bancorp Inc (NYSE:GWB), PBF Energy Inc (NYSE:PBF), PDF Solutions, Inc. (NASDAQ:PDFS), Brookline Bancorp, Inc. (NASDAQ:BRKL), Oaktree Specialty Lending Corporation (NASDAQ:OCSL), and Oxford Industries, Inc. (NYSE:OXM). This group of stocks’ market values are closest to SSYS’s market value.
|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 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $57 million in SSYS’s case. PBF Energy Inc (NYSE:PBF) is the most popular stock in this table. On the other hand Oxford Industries, Inc. (NYSE:OXM) is the least popular one with only 8 bullish hedge fund positions. Stratasys, Ltd. (NASDAQ:SSYS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SSYS is 77.3. 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. Hedge funds were also right about betting on SSYS as the stock returned 57.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.