Should I Avoid InspireMD Inc (NSPR)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of InspireMD Inc (NASDAQ:NSPR) based on that data.

Is InspireMD Inc (NASDAQ:NSPR) ready to rally soon? Investors who are in the know were reducing their bets on the stock. The number of long hedge fund bets shrunk by 1 lately. InspireMD Inc (NASDAQ:NSPR) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 6. Our calculations also showed that NSPR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 4 hedge funds in our database with NSPR holdings at the end of December.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s take a look at the recent hedge fund action surrounding InspireMD Inc (NASDAQ:NSPR).

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

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NSPR over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the biggest position in InspireMD Inc (NASDAQ:NSPR), worth close to $2.1 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $0.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Ken Griffin’s Citadel Investment Group, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to InspireMD Inc (NASDAQ:NSPR), around 0.0026% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.0023 percent of its 13F equity portfolio to NSPR.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Sabby Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as InspireMD Inc (NASDAQ:NSPR) but similarly valued. We will take a look at Salem Media Group Inc. (NASDAQ:SALM), Allena Pharmaceuticals, Inc. (NASDAQ:ALNA), LENSAR, Inc. (NASDAQ:LNSR), CohBar, Inc. (NASDAQ:CWBR), Emclaire Financial Corp (NASDAQ:EMCF), Empresa Distribuidora y Comercializadora Norte Sociedad Anonima (NYSE:EDN), and Investcorp Credit Management BDC, Inc. (NASDAQ:ICMB). This group of stocks’ market values match NSPR’s market value.

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As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $3 million in NSPR’s case. Allena Pharmaceuticals, Inc. (NASDAQ:ALNA) is the most popular stock in this table. On the other hand CohBar, Inc. (NASDAQ:CWBR) is the least popular one with only 1 bullish hedge fund positions. InspireMD Inc (NASDAQ:NSPR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NSPR is 33.3. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately NSPR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NSPR investors were disappointed as the stock returned -40.8% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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