At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Coda Octopus Group, Inc. (NASDAQ:CODA) makes for a good investment right now.
Coda Octopus Group, Inc. (NASDAQ:CODA) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 6. CODA investors should be aware of a decrease in hedge fund interest of late. There were 6 hedge funds in our database with CODA positions at the end of the second quarter. Our calculations also showed that CODA isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to take a peek at the latest hedge fund action regarding Coda Octopus Group, Inc. (NASDAQ:CODA).
What have hedge funds been doing with Coda Octopus Group, Inc. (NASDAQ:CODA)?
At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in CODA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Paul Marshall and Ian Wace’s Marshall Wace LLP has the largest position in Coda Octopus Group, Inc. (NASDAQ:CODA), worth close to $0.2 million, corresponding to less than 0.1%% of its total 13F portfolio. The second largest stake is held by David Harding of Winton Capital Management, with a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Coda Octopus Group, Inc. (NASDAQ:CODA), around 0.0038% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, setting aside 0.0014 percent of its 13F equity portfolio to CODA.
Seeing as Coda Octopus Group, Inc. (NASDAQ:CODA) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds who were dropping their entire stakes by the end of the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, worth close to $0.1 million in stock. Donald Sussman’s fund, Paloma Partners, also dropped its stock, about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Coda Octopus Group, Inc. (NASDAQ:CODA) but similarly valued. We will take a look at Research Solutions, Inc (NASDAQ:RSSS), Portman Ridge Finance Corporation (NASDAQ:PTMN), Biocept, Inc. (NASDAQ:BIOC), SandRidge Energy Inc. (NYSE:SD), Savara, Inc. (NASDAQ:SVRA), Huttig Building Products, Inc. (NASDAQ:HBP), and 180 Degree Capital Corp. (NASDAQ:TURN). This group of stocks’ market valuations are similar to CODA’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $0 million in CODA’s case. SandRidge Energy Inc. (NYSE:SD) is the most popular stock in this table. On the other hand Biocept, Inc. (NASDAQ:BIOC) is the least popular one with only 1 bullish hedge fund positions. Coda Octopus Group, Inc. (NASDAQ:CODA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CODA is 24.7. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately CODA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CODA investors were disappointed as the stock returned 0.9% since the end of September (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.