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NxStage Medical, Inc. (NXTM): Are Hedge Funds Right About This Stock?

NxStage Medical, Inc. (NASDAQ:NXTM) has seen a decrease in hedge fund sentiment lately.

In today’s marketplace, there are many indicators market participants can use to track Mr. Market. A couple of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best investment managers can outpace the broader indices by a very impressive margin (see just how much).

NxStage Medical, Inc. (NASDAQ:NXTM)

Just as beneficial, optimistic insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are plenty of incentives for a bullish insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this method if shareholders know what to do (learn more here).

Consequently, we’re going to take a peek at the latest action regarding NxStage Medical, Inc. (NASDAQ:NXTM).

How have hedgies been trading NxStage Medical, Inc. (NASDAQ:NXTM)?

In preparation for this quarter, a total of 16 of the hedge funds we track held long positions in this stock, a change of -11% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially.

According to our comprehensive database, Deerfield Management, managed by James E. Flynn, holds the most valuable position in NxStage Medical, Inc. (NASDAQ:NXTM). Deerfield Management has a $55.3 million position in the stock, comprising 3.3% of its 13F portfolio. The second largest stake is held by Jerome Pfund and Michael Sjostrom of Sectoral Asset Management, with a $39.8 million position; 1.2% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Charles Clough’s Clough Capital Partners, Israel Englander’s Millennium Management and Daniel Arbess’s Xerion.

Since NxStage Medical, Inc. (NASDAQ:NXTM) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds who sold off their full holdings last quarter. Interestingly, Robert Millard’s Realm Partners said goodbye to the largest position of all the hedgies we key on, worth close to $4.2 million in stock., and Kevin Kotler of Broadfin Capital was right behind this move, as the fund cut about $3.8 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds last quarter.

Insider trading activity in NxStage Medical, Inc. (NASDAQ:NXTM)

Insider buying is most useful when the company in question has seen transactions within the past half-year. Over the last half-year time frame, NxStage Medical, Inc. (NASDAQ:NXTM) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to NxStage Medical, Inc. (NASDAQ:NXTM). These stocks are MAKO Surgical Corp. (NASDAQ:MAKO), ABIOMED, Inc. (NASDAQ:ABMD), Greatbatch Inc (NYSE:GB), Orthofix International NV (NASDAQ:OFIX), and The Spectranetics Corporation (NASDAQ:SPNC). This group of stocks are the members of the medical appliances & equipment industry and their market caps are similar to NXTM’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
MAKO Surgical Corp. (NASDAQ:MAKO) 14 0 0
Greatbatch Inc (NYSE:GB) 10 0 1
Orthofix International NV (NASDAQ:OFIX) 12 6 0
The Spectranetics Corporation (NASDAQ:SPNC) 12 0 2

With the returns exhibited by Insider Monkey’s research, everyday investors should always monitor hedge fund and insider trading activity, and NxStage Medical, Inc. (NASDAQ:NXTM) is an important part of this process.

Click here to learn why you should track hedge funds

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