Should You Avoid iCAD Inc (ICAD)?

Is iCAD Inc (NASDAQ:ICAD) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is iCAD Inc (NASDAQ:ICAD) a good stock to buy now? Prominent investors are in a bearish mood. The number of bullish hedge fund bets went down by 2 recently. Our calculations also showed that ICAD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). ICAD was in 6 hedge funds’ portfolios at the end of the third quarter of 2019. There were 8 hedge funds in our database with ICAD positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most traders, hedge funds are assumed to be slow, old investment vehicles of yesteryear. While there are over 8000 funds in operation at present, Our experts look at the masters of this group, around 750 funds. It is estimated that this group of investors have their hands on the majority of the hedge fund industry’s total capital, and by keeping an eye on their unrivaled investments, Insider Monkey has identified a number of investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .


Jim Simons of Renaissance Technologies

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s take a look at the recent hedge fund action encompassing iCAD Inc (NASDAQ:ICAD).

What does smart money think about iCAD Inc (NASDAQ:ICAD)?

Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ICAD over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in iCAD Inc (NASDAQ:ICAD), which was worth $4.1 million at the end of the third quarter. On the second spot was G2 Investment Partners Management which amassed $1.9 million worth of shares. Springbok Capital, Manatuck Hill Partners, and Sprott Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to iCAD Inc (NASDAQ:ICAD), around 0.53% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, setting aside 0.33 percent of its 13F equity portfolio to ICAD.

Seeing as iCAD Inc (NASDAQ:ICAD) has faced falling interest from the smart money, we can see that there were a few fund managers that slashed their entire stakes in the third quarter. Intriguingly, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital dropped the largest position of the 750 funds watched by Insider Monkey, worth an estimated $0.3 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to iCAD Inc (NASDAQ:ICAD). We will take a look at Axcella Health Inc. (NASDAQ:AXLA), Adams Resources & Energy Inc (NYSE:AE), Goodrich Petroleum Corporation (NYSE:GDP), and Manitex International, Inc. (NASDAQ:MNTX). This group of stocks’ market valuations match ICAD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXLA 3 1069 -1
AE 5 12371 0
GDP 6 24314 1
MNTX 8 10576 0
Average 5.5 12083 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $8 million in ICAD’s case. Manitex International, Inc. (NASDAQ:MNTX) is the most popular stock in this table. On the other hand Axcella Health Inc. (NASDAQ:AXLA) is the least popular one with only 3 bullish hedge fund positions. iCAD Inc (NASDAQ:ICAD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ICAD, though not to the same extent, as the stock returned 9.6% during the first two months of the fourth quarter and outperformed the market as well.

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