The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Alphatec Holdings Inc (NASDAQ:ATEC).
Alphatec Holdings Inc (NASDAQ:ATEC) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Alphatec Holdings Inc (NASDAQ:ATEC) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ATEC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
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. With all of this in mind we’re going to check out the latest hedge fund action regarding Alphatec Holdings Inc (NASDAQ:ATEC).
Do Hedge Funds Think ATEC Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in ATEC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Deerfield Management held the most valuable stake in Alphatec Holdings Inc (NASDAQ:ATEC), which was worth $50.6 million at the end of the fourth quarter. On the second spot was Driehaus Capital which amassed $29.4 million worth of shares. Perceptive Advisors, Royce & Associates, and Point72 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 Deerfield Management allocated the biggest weight to Alphatec Holdings Inc (NASDAQ:ATEC), around 1.06% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, earmarking 0.43 percent of its 13F equity portfolio to ATEC.
As aggregate interest increased, specific money managers were breaking ground themselves. Perceptive Advisors, managed by Joseph Edelman, established the most valuable position in Alphatec Holdings Inc (NASDAQ:ATEC). Perceptive Advisors had $25.5 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also initiated a $10 million position during the quarter. The other funds with brand new ATEC positions are Renaissance Technologies, Peter Muller’s PDT Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Alphatec Holdings Inc (NASDAQ:ATEC) but similarly valued. We will take a look at Compass Diversified Holdings (NYSE:CODI), PGT Innovations Inc. (NASDAQ:PGTI), Dine Brands Global, Inc. (NYSE:DIN), Sixth Street Specialty Lending Inc (NYSE:TSLX), Zomedica Pharmaceuticals Corp. (NYSE:ZOM), Ladder Capital Corp (NYSE:LADR), and Guess’, Inc. (NYSE:GES). This group of stocks’ market valuations are closest to ATEC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CODI | 5 | 35155 | 1 |
| PGTI | 10 | 81351 | 2 |
| DIN | 28 | 248955 | 2 |
| TSLX | 9 | 100520 | -3 |
| ZOM | 5 | 6985 | 2 |
| LADR | 11 | 31426 | 3 |
| GES | 20 | 97999 | 1 |
| Average | 12.6 | 86056 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $167 million in ATEC’s case. Dine Brands Global, Inc. (NYSE:DIN) is the most popular stock in this table. On the other hand Compass Diversified Holdings (NYSE:CODI) is the least popular one with only 5 bullish hedge fund positions. Alphatec Holdings Inc (NASDAQ:ATEC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATEC is 64.3. 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 positive signal but 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately ATEC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ATEC were disappointed as the stock returned -10.6% since the end of March (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 many of these stocks already outperformed the market since 2019.
Follow Alphatec Holdings Inc. (NASDAQ:ATEC)
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Disclosure: None. This article was originally published at Insider Monkey.
