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

How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding NxStage Medical, Inc. (NASDAQ:NXTM).

Is NxStage Medical, Inc. (NASDAQ:NXTM) going to take off soon? The best stock pickers are taking a bearish view. The number of long hedge fund positions were trimmed by 10 recently. NXTM was in 20 hedge funds’ portfolios at the end of September. There were 30 hedge funds in our database with NXTM holdings at the end of the previous quarter. At the end of this article we will also compare NXTM to other stocks including Banner Corporation (NASDAQ:BANR), Cooper-Standard Holdings Inc (NYSE:CPS), and Wright Medical Group NV (NASDAQ:WMGI) to get a better sense of its popularity.

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In the financial world there is a multitude of gauges investors employ to value publicly traded companies. Some of the most innovative gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outperform the S&P 500 by a healthy margin (see the details here).

With all of this in mind, let’s review the fresh action surrounding NxStage Medical, Inc. (NASDAQ:NXTM).

What have hedge funds been doing with NxStage Medical, Inc. (NASDAQ:NXTM)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, James E. Flynn’s Deerfield Management has the largest position in NxStage Medical, Inc. (NASDAQ:NXTM), worth close to $99.6 million, accounting for 3.9% of its total 13F portfolio. The second most bullish fund manager is Justin John Ferayorni of Tamarack Capital Management, with a $31.5 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Steve Cohen’s Point72 Asset Management, Israel Englander’s Millennium Management and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.

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