Do Hedge Funds Love Senseonics Holdings, Inc. (SENS)?

Nina Todic

Updated Tue, Dec 18, 2018, 9:10 PM

Is Senseonics Holdings, Inc. (NYSE:SENS) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.

Hedge fund interest in Senseonics Holdings, Inc. (NYSE:SENS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SENS to other stocks including GS Acquisition Holdings Corp. (NYSE:GSAH), Thermon Group Holdings, Inc. (NYSE:THR), and Granite Point Mortgage Trust Inc. (NYSE:GPMT) to get a better sense of its popularity.

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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Let's analyze the fresh hedge fund action surrounding Senseonics Holdings, Inc. (NYSE:SENS).

How are hedge funds trading Senseonics Holdings, Inc. (NYSE:SENS)?

At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, no change from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SENS over the last 13 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

More specifically, Millennium Management was the largest shareholder of Senseonics Holdings, Inc. (NYSE:SENS), with a stake worth $6.5 million reported as of the end of September. Trailing Millennium Management was Granite Point Capital, which amassed a stake valued at $4.5 million. Point72 Asset Management, G2 Investment Partners Management, and Sio Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Because Senseonics Holdings, Inc. (NYSE:SENS) has experienced falling interest from the smart money, we can see that there lies a certain "tier" of fund managers who were dropping their positions entirely by the end of the third quarter. Interestingly, Zach Schreiber's Point State Capital said goodbye to the largest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $11 million in stock, and Kenneth Tropin's Graham Capital Management was right behind this move, as the fund said goodbye to about $9.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks similar to Senseonics Holdings, Inc. (NYSE:SENS). We will take a look at GS Acquisition Holdings Corp. (NYSE:GSAH), Thermon Group Holdings, Inc. (NYSE:THR), Granite Point Mortgage Trust Inc. (NYSE:GPMT), and TCP Capital Corp (NASDAQ:TCPC). This group of stocks' market values resemble SENS's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSAH,28,380665,0 THR,10,46858,4 GPMT,6,20519,0 TCPC,10,19293,1 Average,13.5,116834,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $25 million in SENS's case. GS Acquisition Holdings Corp. (NYSE:GSAH) is the most popular stock in this table. On the other hand Granite Point Mortgage Trust Inc. (NYSE:GPMT) is the least popular one with only 6 bullish hedge fund positions. Senseonics Holdings, Inc. (NYSE:SENS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard GSAH might be a better candidate to consider a long position.

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

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