Roubaix Capital’s Short Bet on Luminex Corp. (LMNX) Pays Off

Roubaix Capital LLC, an investment management firm, published its ‘Roubaix Fund Composite’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 26.63% was recorded by the fund for the Q4 of 2020, outperforming its HFRI Equity Hedge benchmark that delivered a 14.50% return but below its Russell 2000 index that had a 31.37% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Roubaix Capital, in their Q4 2020 Investor Letter, said that Luminex Corporation (NASDAQ: LMNX) was the top contributor for their short portfolio in the fourth quarter of 2020. Luminex Corporation is a medical device and diagnostics company that currently has a $1.6 billion market cap. For the past 3 months, LMNX delivered a decent 68.44% return and settled at $26.31 per share at the closing of February 12th.

Here is what Roubaix Capital has to say about Luminex Corporation in their Q4 2020 investor letter:

“The best performing short position in the fourth quarter was Luminex (LMNX), a medical device and diagnostics company that recently lost a large contract, faces increasing competition, and executed questionable M&A in the past. Our premise in shorting the stock in Q3 was that too many diagnostic testing stocks appreciated as beneficiaries from COVID-19. We believed LMNX was capitalizing revenue and profits that were not likely to persist past 2021 as the pandemic waned from vaccine rollouts. If that proved to be the case, investors would quickly shift their attention back to mounting competitive pressures and difficult comparisons in future periods. Our short thesis played out in a relatively short amount of time and we closed the position.”

Last September, we published an article telling that Luminex Corporation (NASDAQ: LMNX) was in 27 hedge fund portfolios, its all time high statistics. LMNX delivered an 18.93% return in the past 12 months.

Our calculations show that Luminex Corporation (NASDAQ: LMNX) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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