Were Hedge Funds Right About Accuray Incorporated (ARAY)?

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 Accuray Incorporated (NASDAQ:ARAY) based on that data.

Hedge fund interest in Accuray Incorporated (NASDAQ:ARAY) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ARAY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ARAY to other stocks including XOMA Corp (NASDAQ:XOMA), Yunji Inc. (NASDAQ:YJ), and Seneca Foods Corp. (NASDAQ:SENEB) to get a better sense of its popularity.

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Peter Algert of Algert Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 we’re going to take a peek at the recent hedge fund action encompassing Accuray Incorporated (NASDAQ:ARAY).

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

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in ARAY a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Among these funds, Archon Capital Management held the most valuable stake in Accuray Incorporated (NASDAQ:ARAY), which was worth $22.7 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $17.9 million worth of shares. D E Shaw, HealthInvest Partners AB, and Royce & Associates 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 HealthInvest Partners AB allocated the biggest weight to Accuray Incorporated (NASDAQ:ARAY), around 7.79% of its 13F portfolio. Archon Capital Management is also relatively very bullish on the stock, dishing out 3.26 percent of its 13F equity portfolio to ARAY.

Because Accuray Incorporated (NASDAQ:ARAY) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds who were dropping their positions entirely by the end of the first quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $1.5 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund sold off about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Accuray Incorporated (NASDAQ:ARAY). These stocks are XOMA Corp (NASDAQ:XOMA), Yunji Inc. (NASDAQ:YJ), Seneca Foods Corp. (NASDAQ:SENEB), VOXX International Corp (NASDAQ:VOXX), Bridgewater Bancshares, Inc. (NASDAQ:BWB), Arcimoto, Inc. (NASDAQ:FUV), and DURECT Corporation (NASDAQ:DRRX). This group of stocks’ market valuations match ARAY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XOMA 5 169665 -5
YJ 3 388 -1
SENEB 2 2272 0
VOXX 11 63528 3
BWB 7 14728 0
FUV 5 11472 0
DRRX 10 47350 2
Average 6.1 44200 -0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.1 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $90 million in ARAY’s case. VOXX International Corp (NASDAQ:VOXX) is the most popular stock in this table. On the other hand Seneca Foods Corp. (NASDAQ:SENEB) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Accuray Incorporated (NASDAQ:ARAY) is more popular among hedge funds. Our overall hedge fund sentiment score for ARAY is 80.5. 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. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Unfortunately ARAY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ARAY were disappointed as the stock returned -15.4% since the end of the first quarter (through 7/23) 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 since 2019.

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