Is TXMD A Good Stock To Buy Now?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards TherapeuticsMD Inc (NASDAQ:TXMD) to find out whether there were any major changes in hedge funds’ views.

Is TXMD a good stock to buy now? TherapeuticsMD Inc (NASDAQ:TXMD) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 18. TXMD investors should be aware of an increase in support from the world’s most elite money managers recently. There were 10 hedge funds in our database with TXMD positions at the end of the second quarter. Our calculations also showed that TXMD 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.

In today’s marketplace there are plenty of formulas stock traders use to evaluate publicly traded companies. A couple of the less utilized formulas are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the S&P 500 by a significant amount (see the details here).

Thomas Claugus of GMT Capital

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. Now we’re going to take a look at the key hedge fund action regarding TherapeuticsMD Inc (NASDAQ:TXMD).

Do Hedge Funds Think TXMD Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in TXMD a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Rubric Capital Management, managed by David Rosen, holds the largest position in TherapeuticsMD Inc (NASDAQ:TXMD). Rubric Capital Management has a $22 million position in the stock, comprising 2.1% of its 13F portfolio. Sitting at the No. 2 spot is GMT Capital, managed by Thomas E. Claugus, which holds a $9.5 million position; 0.7% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish contain Joseph Samuels’s Islet Management, Marc Majzner’s Clearline Capital and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Rubric Capital Management allocated the biggest weight to TherapeuticsMD Inc (NASDAQ:TXMD), around 2.05% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, setting aside 0.69 percent of its 13F equity portfolio to TXMD.

As industrywide interest jumped, some big names have jumped into TherapeuticsMD Inc (NASDAQ:TXMD) headfirst. Islet Management, managed by Joseph Samuels, initiated the largest position in TherapeuticsMD Inc (NASDAQ:TXMD). Islet Management had $2.4 million invested in the company at the end of the quarter. Marc Majzner’s Clearline Capital also initiated a $1.2 million position during the quarter. The following funds were also among the new TXMD investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and Joel Greenblatt’s Gotham Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as TherapeuticsMD Inc (NASDAQ:TXMD) but similarly valued. These stocks are Harpoon Therapeutics, Inc. (NASDAQ:HARP), Alphatec Holdings Inc (NASDAQ:ATEC), Star Group L.P. (NYSE:SGU), Tribune Publishing Company (NASDAQ:TPCO), Viad Corp (NYSE:VVI), UroGen Pharma Ltd. (NASDAQ:URGN), and Lands’ End, Inc. (NASDAQ:LE). 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
HARP 12 59522 1
ATEC 13 42822 1
SGU 9 81549 -2
TPCO 13 151012 -2
VVI 15 65128 0
URGN 4 26840 -1
LE 9 68018 -3
Average 10.7 70699 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $36 million in TXMD’s case. Viad Corp (NYSE:VVI) is the most popular stock in this table. On the other hand UroGen Pharma Ltd. (NASDAQ:URGN) is the least popular one with only 4 bullish hedge fund positions. TherapeuticsMD Inc (NASDAQ:TXMD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TXMD is 56.2. 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 TXMD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TXMD were disappointed as the stock returned -23.4% 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.

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Disclosure: None. This article was originally published at Insider Monkey.