Is TherapeuticsMD Inc (TXMD) a Good Stock To Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on TherapeuticsMD Inc (NYSEMKT:TXMD).

TherapeuticsMD Inc (NYSEMKT:TXMD) investors should pay attention to an increase in hedge fund interest in recent months. There were 13 hedge funds in our database with TXMD holdings at the end of the third quarter. 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 Quad/Graphics, Inc. (NYSE:QUAD), Fossil Inc (NASDAQ:FOSL), and Interactive Intelligence Group Inc (NASDAQ:ININ) to gather more data points.

Follow Therapeuticsmd Inc. (NYSEMKT:TXMD)

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Syda Productions/

Syda Productions/

Keeping this in mind, we’re going to analyze the key action encompassing TherapeuticsMD Inc (NYSEMKT:TXMD).

What does the smart money think about TherapeuticsMD Inc (NYSEMKT:TXMD)?

Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by four funds from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in TXMD heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the biggest position in TherapeuticsMD Inc (NYSEMKT:TXMD), worth close to $17.4 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Rock Springs Capital Management, led by Kris Jenner, Gordon Bussard, Graham McPhail, holding a $12.3 million position; 0.8% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish consist of Millennium Management, one of the 10 largest hedge funds in the world, and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As aggregate interest increased, key hedge funds have jumped into TherapeuticsMD Inc (NYSEMKT:TXMD) headfirst. Balyasny Asset Management, led by Dmitry Balyasny, established the most valuable position in TherapeuticsMD Inc (NYSEMKT:TXMD). Balyasny Asset Management had $5.5 million invested in the company at the end of the quarter. Ken Greenberg and David Kim’s Ghost Tree Capital also made a $1.7 million investment in the stock during the quarter. The other funds with brand new TXMD positions are Warren Lammert’s Granite Point Capital, Hal Mintz’s Sabby Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks similar to TherapeuticsMD Inc (NYSEMKT:TXMD). These stocks are Quad/Graphics, Inc. (NYSE:QUAD), Fossil Inc (NASDAQ:FOSL), Interactive Intelligence Group Inc (NASDAQ:ININ), and G-III Apparel Group, Ltd. (NASDAQ:GIII). This group of stocks’ market caps are closest to TXMD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
QUAD 21 107638 3
FOSL 15 119436 -5
ININ 13 258568 1
GIII 11 78336 -1

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $141 million, versus $57 million in TXMD’s case. Quad/Graphics, Inc. (NYSE:QUAD) is the most popular stock in this table. On the other hand G-III Apparel Group, Ltd. (NASDAQ:GIII) is the least popular one with only 11 bullish hedge fund positions. TherapeuticsMD Inc (NYSEMKT:TXMD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QUAD might be a better candidate to consider taking a long position in.

Disclosure: none