We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Natus Medical Incorporated (NASDAQ:NTUS) is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Natus Medical Incorporated (NASDAQ:NTUS) a buy right now? Hedge funds are buying. The number of long hedge fund bets advanced by 2 lately. Our calculations also showed that NTUS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Ric Dillon of Diamond Hill Capital
We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. 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 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 glance at the recent hedge fund action regarding Natus Medical Incorporated (NASDAQ:NTUS).
How are hedge funds trading Natus Medical Incorporated (NASDAQ:NTUS)?
At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in NTUS 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.
The largest stake in Natus Medical Incorporated (NASDAQ:NTUS) was held by Impax Asset Management, which reported holding $19.1 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $14.6 million position. Other investors bullish on the company included Diamond Hill Capital, Renaissance Technologies, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Lyon Street Capital allocated the biggest weight to Natus Medical Incorporated (NASDAQ:NTUS), around 2.53% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, designating 2.49 percent of its 13F equity portfolio to NTUS.
As one would reasonably expect, key money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in Natus Medical Incorporated (NASDAQ:NTUS). Arrowstreet Capital had $7.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $2 million position during the quarter. The other funds with brand new NTUS positions are Ken Griffin’s Citadel Investment Group, Roger Ibbotson’s Zebra Capital Management, and Hoon Kim’s Quantinno Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Natus Medical Incorporated (NASDAQ:NTUS) but similarly valued. These stocks are Aerie Pharmaceuticals Inc (NASDAQ:AERI), Fangdd Network Group Ltd. (NASDAQ:DUO), Chase Corporation (NYSE:CCF), and LendingClub Corp (NYSE:LC). All of these stocks’ market caps match NTUS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AERI | 21 | 339924 | -9 |
| DUO | 1 | 549 | 1 |
| CCF | 9 | 96736 | 0 |
| LC | 8 | 3152 | 0 |
| Average | 9.75 | 110090 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $98 million in NTUS’s case. Aerie Pharmaceuticals Inc (NASDAQ:AERI) is the most popular stock in this table. On the other hand Fangdd Network Group Ltd. (NASDAQ:DUO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Natus Medical Incorporated (NASDAQ:NTUS) is more popular among hedge funds. 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 1.0% in 2020 through May 1st and still beat the market by 12.9 percentage points. Unfortunately NTUS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NTUS were disappointed as the stock returned -28.7% during the four months of 2020 (through May 1st) 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 most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
