While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the second quarter and hedging or reducing many of their long positions. Some fund managers like this one are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Stratasys, Ltd. (NASDAQ:SSYS).
Stratasys, Ltd. (NASDAQ:SSYS) investors should be aware of an increase in support from the world's most elite money managers in recent months. Our calculations also showed that SSYS isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most shareholders, hedge funds are viewed as slow, old financial vehicles of years past. While there are over 8000 funds in operation at the moment, Our researchers look at the leaders of this club, around 750 funds. It is estimated that this group of investors handle the majority of the smart money's total asset base, and by monitoring their finest picks, Insider Monkey has identified numerous investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to review the fresh hedge fund action surrounding Stratasys, Ltd. (NASDAQ:SSYS).
What does smart money think about Stratasys, Ltd. (NASDAQ:SSYS)?
Heading into the third quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SSYS over the last 16 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Stratasys, Ltd. (NASDAQ:SSYS), which was worth $75.5 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $34.9 million worth of shares. Moreover, D E Shaw, GAMCO Investors, and Royce & Associates were also bullish on Stratasys, Ltd. (NASDAQ:SSYS), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names were leading the bulls' herd. Concourse Capital Management, managed by Joseph Mathias, assembled the most outsized position in Stratasys, Ltd. (NASDAQ:SSYS). Concourse Capital Management had $0.5 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new SSYS investors: Minhua Zhang's Weld Capital Management and Claes Fornell's CSat Investment Advisory.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Stratasys, Ltd. (NASDAQ:SSYS) but similarly valued. These stocks are Opko Health Inc. (NASDAQ:OPK), Arcos Dorados Holdings Inc. (NYSE:ARCO), Sally Beauty Holdings, Inc. (NYSE:SBH), and Suburban Propane Partners LP (NYSE:SPH). All of these stocks' market caps match SSYS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OPK,14,13007,1 ARCO,14,123488,-4 SBH,20,117843,1 SPH,4,96526,-1 Average,13,87716,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $176 million in SSYS's case. Sally Beauty Holdings, Inc. (NYSE:SBH) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only 4 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. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SSYS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SSYS were disappointed as the stock returned -27.4% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.