Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Ekso Bionics Holdings, Inc. (NASDAQ:EKSO)? The smart money sentiment can provide an answer to this question.
Ekso Bionics Holdings, Inc. (NASDAQ:EKSO) was in 4 hedge funds' portfolios at the end of the third quarter of 2019. EKSO has experienced an increase in support from the world's most elite money managers lately. There were 2 hedge funds in our database with EKSO holdings at the end of the previous quarter. Our calculations also showed that EKSO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's take a glance at the latest hedge fund action surrounding Ekso Bionics Holdings, Inc. (NASDAQ:EKSO).
How are hedge funds trading Ekso Bionics Holdings, Inc. (NASDAQ:EKSO)?
At Q3's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in EKSO a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ted Wang's Puissance Capital Management has the biggest position in Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), worth close to $10.9 million, accounting for 24.3% of its total 13F portfolio. The second largest stake is held by Winton Capital Management, managed by David Harding, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism contain Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Puissance Capital Management allocated the biggest weight to Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), around 24.28% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.0017 percent of its 13F equity portfolio to EKSO.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Winton Capital Management, managed by David Harding, established the most outsized position in Ekso Bionics Holdings, Inc. (NASDAQ:EKSO). Winton Capital Management had $0.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let's check out hedge fund activity in other stocks similar to Ekso Bionics Holdings, Inc. (NASDAQ:EKSO). These stocks are The L.S. Starrett Company (NYSE:SCX), ImmuCell Corporation (NASDAQ:ICCC), China Jo-Jo Drugstores, Inc. (NASDAQ:CJJD), and Surface Oncology, Inc. (NASDAQ:SURF). All of these stocks' market caps resemble EKSO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCX,4,5778,-1 ICCC,4,1558,0 CJJD,4,8490,0 SURF,5,4909,-2 Average,4.25,5184,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $11 million in EKSO's case. Surface Oncology, Inc. (NASDAQ:SURF) is the most popular stock in this table. On the other hand The L.S. Starrett Company (NYSE:SCX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Ekso Bionics Holdings, Inc. (NASDAQ:EKSO) is even less popular than SCX. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on EKSO, though not to the same extent, as the stock returned 8.3% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.