We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Stratasys, Ltd. (NASDAQ:SSYS) based on that data.
Stratasys, Ltd. (NASDAQ:SSYS) investors should be aware of an increase in hedge fund sentiment in recent months. Stratasys, Ltd. (NASDAQ:SSYS) was in 24 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 16 hedge funds in our database with SSYS positions at the end of the fourth quarter. Our calculations also showed that SSYS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
COATUE MANAGEMENT
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. Now we're going to take a gander at the key hedge fund action regarding Stratasys, Ltd. (NASDAQ:SSYS).
Do Hedge Funds Think SSYS Is A Good Stock To Buy Now?
At Q1's end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in SSYS a year ago. With the smart money's capital changing hands, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, ARK Investment Management, managed by Catherine D. Wood, holds the most valuable position in Stratasys, Ltd. (NASDAQ:SSYS). ARK Investment Management has a $269.9 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Renaissance Technologies, holding a $80.9 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish encompass D. E. Shaw's D E Shaw, Ken Griffin's Citadel Investment Group and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to Stratasys, Ltd. (NASDAQ:SSYS), around 1.23% of its 13F portfolio. ARK Investment Management is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to SSYS.
Consequently, some big names were leading the bulls' herd. CaaS Capital, managed by Frank Fu, initiated the most outsized position in Stratasys, Ltd. (NASDAQ:SSYS). CaaS Capital had $7.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $5.2 million position during the quarter. The following funds were also among the new SSYS investors: Matthew L Pinz's Pinz Capital, Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, and Philippe Laffont's Coatue Management.
Let's also examine hedge fund activity in other stocks similar to Stratasys, Ltd. (NASDAQ:SSYS). These stocks are Kronos Bio, Inc. (NASDAQ:KRON), Acadia Realty Trust (NYSE:AKR), LTC Properties Inc (NYSE:LTC), Global Net Lease, Inc. (NYSE:GNL), Pulmonx Corporation (NASDAQ:LUNG), Kite Realty Group Trust (NYSE:KRG), and SiriusPoint Ltd. (NYSE:SPNT). This group of stocks' market values match SSYS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KRON,16,225983,-3 AKR,8,22188,-1 LTC,7,6702,-1 GNL,16,38694,9 LUNG,27,246881,5 KRG,11,46978,7 SPNT,14,39043,3 Average,14.1,89496,2.7 [/table]
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $482 million in SSYS's case. Pulmonx Corporation (NASDAQ:LUNG) is the most popular stock in this table. On the other hand LTC Properties Inc (NYSE:LTC) is the least popular one with only 7 bullish hedge fund positions. Stratasys, Ltd. (NASDAQ:SSYS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SSYS is 82.5. 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. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately SSYS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SSYS were disappointed as the stock returned -23% since the end of March (through 7/16) 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.
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