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NuVasive, Inc. (NUVA): Are Hedge Funds Right About This Stock?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

NuVasive, Inc. (NASDAQ:NUVA) was in 22 hedge funds’ portfolios at the end of the third quarter of 2018. NUVA has experienced a decrease in enthusiasm from smart money in recent months. There were 23 hedge funds in our database with NUVA holdings at the end of the previous quarter. Our calculations also showed that NUVA isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Justin John Ferayorni - Tamarack Capital Management

We’re going to analyze the latest hedge fund action regarding NuVasive, Inc. (NASDAQ:NUVA).

Hedge fund activity in NuVasive, Inc. (NASDAQ:NUVA)

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the second quarter of 2018. On the other hand, there were a total of 19 hedge funds with a bullish position in NUVA at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

NUVA_dec2018

When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in NuVasive, Inc. (NASDAQ:NUVA). Fisher Asset Management has a $89.2 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Consonance Capital Management, led by Mitchell Blutt, holding a $77.3 million position; 4.2% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish comprise Israel Englander’s Millennium Management, Justin John Ferayorni’s Tamarack Capital Management and Jeremy Green’s Redmile Group.

Because NuVasive, Inc. (NASDAQ:NUVA) has experienced declining sentiment from the smart money, it’s safe to say that there were a few hedgies that slashed their positions entirely by the end of the third quarter. Interestingly, Stephen DuBois’s Camber Capital Management said goodbye to the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $62.5 million in stock, and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management was right behind this move, as the fund cut about $19.4 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as NuVasive, Inc. (NASDAQ:NUVA) but similarly valued. We will take a look at Stifel Financial Corp. (NYSE:SF), Taubman Centers, Inc. (NYSE:TCO), Barnes Group Inc. (NYSE:B), and Clearway Energy, Inc. (NYSE:CWEN). All of these stocks’ market caps are similar to NUVA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SF 12 249082 -3
TCO 20 252563 -1
B 13 39069 1
CWEN 16 104722 0
Average 15.25 161359 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $350 million in NUVA’s case. Taubman Centers, Inc. (NYSE:TCO) is the most popular stock in this table. On the other hand Stifel Financial Corp. (NYSE:SF) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks NuVasive, Inc. (NASDAQ:NUVA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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