Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of OrthoPediatrics Corp. (NASDAQ:KIDS).
OrthoPediatrics Corp. (NASDAQ:KIDS) investors should be aware of a decrease in hedge fund interest lately. OrthoPediatrics Corp. (NASDAQ:KIDS) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. There were 13 hedge funds in our database with KIDS positions at the end of the second quarter. Our calculations also showed that KIDS 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 21st century investor’s toolkit there are dozens of methods market participants put to use to value stocks. A duo of the less known methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top investment managers can beat the S&P 500 by a significant margin (see the details here).
AQR CAPITAL MANAGEMENT
Cliff Asness of AQR 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. Keeping this in mind let's take a gander at the latest hedge fund action surrounding OrthoPediatrics Corp. (NASDAQ:KIDS).
Do Hedge Funds Think KIDS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KIDS over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is KIDS A Good Stock To Buy?
According to Insider Monkey's hedge fund database, Richard Driehaus's Driehaus Capital has the largest position in OrthoPediatrics Corp. (NASDAQ:KIDS), worth close to $24 million, comprising 0.5% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which holds a $10.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain Efrem Kamen's Pura Vida Investments, Christiana Goh Bardon's Burrage Capital Management and Anand Parekh's Alyeska Investment Group. In terms of the portfolio weights assigned to each position Burrage Capital Management allocated the biggest weight to OrthoPediatrics Corp. (NASDAQ:KIDS), around 6.22% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, dishing out 1.72 percent of its 13F equity portfolio to KIDS.
Judging by the fact that OrthoPediatrics Corp. (NASDAQ:KIDS) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of fund managers that elected to cut their full holdings in the third quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, comprising close to $2 million in stock. Steve Cohen's fund, Point72 Asset Management, also cut its stock, about $1.6 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as OrthoPediatrics Corp. (NASDAQ:KIDS) but similarly valued. We will take a look at Systemax Inc. (NYSE:SYX), Fulgent Genetics, Inc. (NASDAQ:FLGT), Dine Brands Global, Inc. (NYSE:DIN), SFL Corporation Ltd. (NYSE:SFL), AZZ Incorporated (NYSE:AZZ), Gossamer Bio, Inc. (NASDAQ:GOSS), and QAD Inc. (NASDAQ:QADB). This group of stocks' market valuations are similar to KIDS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYX,15,29792,4 FLGT,6,32654,3 DIN,25,150078,0 SFL,10,30526,-5 AZZ,15,66278,-5 GOSS,21,196663,2 QADB,1,752,0 Average,13.3,72392,-0.1 [/table]
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $70 million in KIDS's case. Dine Brands Global, Inc. (NYSE:DIN) is the most popular stock in this table. On the other hand QAD Inc. (NASDAQ:QADB) is the least popular one with only 1 bullish hedge fund positions. OrthoPediatrics Corp. (NASDAQ:KIDS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KIDS is 54.6. 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 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately KIDS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); KIDS investors were disappointed as the stock returned -0.1% since the end of September (through 12/8) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
