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Do Hedge Funds Love Cutera, Inc. (CUTR)?

Abigail Fisher

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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Cutera, Inc. (NASDAQ:CUTR) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Cutera, Inc. (NASDAQ:CUTR) investors should be aware of a decrease in activity from the world's largest hedge funds of late. Our calculations also showed that CUTR isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]

Mario Gabelli of GAMCO Investors
Mario Gabelli of GAMCO Investors

We're going to take a look at the new hedge fund action regarding Cutera, Inc. (NASDAQ:CUTR).

What does the smart money think about Cutera, Inc. (NASDAQ:CUTR)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the second quarter of 2018. By comparison, 17 hedge funds held shares or bullish call options in CUTR heading into this year. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CUTR_dec2018
CUTR_dec2018

The largest stake in Cutera, Inc. (NASDAQ:CUTR) was held by Renaissance Technologies, which reported holding $26.5 million worth of stock at the end of September. It was followed by GAMCO Investors with a $21.5 million position. Other investors bullish on the company included AQR Capital Management, Voce Capital, and Point72 Asset Management.

Judging by the fact that Cutera, Inc. (NASDAQ:CUTR) has witnessed bearish sentiment from the smart money, it's safe to say that there was a specific group of hedge funds who were dropping their positions entirely heading into Q3. It's worth mentioning that Christopher James's Partner Fund Management dumped the largest investment of the 700 funds watched by Insider Monkey, comprising about $19.6 million in stock, and Louis Bacon's Moore Global Investments was right behind this move, as the fund sold off about $1.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q3.

Let's check out hedge fund activity in other stocks similar to Cutera, Inc. (NASDAQ:CUTR). We will take a look at Corenergy Infrastructure Trust Inc (NYSE:CORR), Translate Bio, Inc. (NASDAQ:TBIO), AV Homes Inc (NASDAQ:AVHI), and Gold Standard Ventures Corp (NYSE:GSV). All of these stocks' market caps resemble CUTR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CORR,7,57285,1 TBIO,11,54532,-4 AVHI,11,52144,-3 GSV,2,3176,-1 Average,7.75,41784,-1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $77 million in CUTR's case. Translate Bio, Inc. (NASDAQ:TBIO) is the most popular stock in this table. On the other hand Gold Standard Ventures Corp (NYSE:GSV) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Cutera, Inc. (NASDAQ:CUTR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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