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Should You Buy Orthofix Medical Inc (OFIX)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Orthofix Medical Inc (NASDAQ:OFIX).

Orthofix Medical Inc (NASDAQ:OFIX) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that OFIX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most shareholders, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, We choose to focus on the bigwigs of this group, about 850 funds. It is estimated that this group of investors handle most of all hedge funds’ total asset base, and by shadowing their top investments, Insider Monkey has revealed a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Chuck Royce

Chuck Royce of Royce & Associates

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the new hedge fund action surrounding Orthofix Medical Inc (NASDAQ:OFIX).

What have hedge funds been doing with Orthofix Medical Inc (NASDAQ:OFIX)?

Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in OFIX a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is OFIX A Good Stock To Buy?

More specifically, Paradice Investment Management was the largest shareholder of Orthofix Medical Inc (NASDAQ:OFIX), with a stake worth $29.5 million reported as of the end of September. Trailing Paradice Investment Management was Renaissance Technologies, which amassed a stake valued at $12.9 million. Royce & Associates, GLG Partners, and Citadel Investment Group 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 Paradice Investment Management allocated the biggest weight to Orthofix Medical Inc (NASDAQ:OFIX), around 3.27% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, dishing out 0.83 percent of its 13F equity portfolio to OFIX.

Consequently, some big names were breaking ground themselves. Engineers Gate Manager, managed by Greg Eisner, created the most valuable position in Orthofix Medical Inc (NASDAQ:OFIX). Engineers Gate Manager had $0.9 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Orthofix Medical Inc (NASDAQ:OFIX) but similarly valued. We will take a look at ACM Research, Inc. (NASDAQ:ACMR), Banco BBVA Argentina S.A. (NYSE:BBAR), Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), and Universal Electronics Inc (NASDAQ:UEIC). This group of stocks’ market valuations resemble OFIX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACMR 10 43651 0
BBAR 8 4407 -1
GLDD 20 78403 -5
UEIC 13 21742 1
Average 12.75 37051 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $78 million in OFIX’s case. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is the most popular stock in this table. On the other hand Banco BBVA Argentina S.A. (NYSE:BBAR) is the least popular one with only 8 bullish hedge fund positions. Orthofix Medical Inc (NASDAQ:OFIX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately OFIX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on OFIX were disappointed as the stock returned 16.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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