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. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Stereotaxis Inc (NYSE:STXS).
Is STXS a good stock to buy now? Hedge fund interest in Stereotaxis Inc (NYSE:STXS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that STXS 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as iRadimed Corporation (NASDAQ:IRMD), Capital Southwest Corporation (NASDAQ:CSWC), and Taseko Mines Limited (NYSE:TGB) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Arbiter Partners Capital Management's Returns, AUM and Holdings
Paul Isaac of Arbiter Partners Capital Management
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 15 best blue chip stocks 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 let's review the recent hedge fund action encompassing Stereotaxis Inc (NYSE:STXS).
Do Hedge Funds Think STXS Is A Good Stock To Buy Now?
At third quarter's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in STXS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Stereotaxis Inc (NYSE:STXS) was held by DAFNA Capital Management, which reported holding $49 million worth of stock at the end of September. It was followed by Arbiter Partners Capital Management with a $15.3 million position. Other investors bullish on the company included Consonance Capital Management, Redmile Group, and Opaleye Management. In terms of the portfolio weights assigned to each position DAFNA Capital Management allocated the biggest weight to Stereotaxis Inc (NYSE:STXS), around 15.92% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, designating 2.12 percent of its 13F equity portfolio to STXS.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Zebra Capital Management).
Let's go over hedge fund activity in other stocks similar to Stereotaxis Inc (NYSE:STXS). These stocks are iRadimed Corporation (NASDAQ:IRMD), Capital Southwest Corporation (NASDAQ:CSWC), Taseko Mines Limited (NYSE:TGB), United Insurance Holdings Corp. (NASDAQ:UIHC), West Bancorporation, Inc. (NASDAQ:WTBA), G. Willi-Food International Limited (NASDAQ:WILC), and Genius Brands International, Inc. (NASDAQ:GNUS). This group of stocks' market caps resemble STXS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IRMD,6,33517,-3 CSWC,7,8484,-1 TGB,5,7070,2 UIHC,9,7237,0 WTBA,3,6805,0 WILC,3,29801,0 GNUS,2,2021,-2 Average,5,13562,-0.6 [/table]
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $108 million in STXS's case. United Insurance Holdings Corp. (NASDAQ:UIHC) is the most popular stock in this table. On the other hand Genius Brands International, Inc. (NASDAQ:GNUS) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Stereotaxis Inc (NYSE:STXS) is more popular among hedge funds. Our overall hedge fund sentiment score for STXS is 85. 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. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on STXS as the stock returned 27.1% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
