We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like CryoPort, Inc. (NASDAQ:CYRX).
Is CryoPort, Inc. (NASDAQ:CYRX) ready to rally soon? Money managers are getting more bullish. The number of long hedge fund positions moved up by 4 lately. Our calculations also showed that CYRX isn't among the 30 most popular stocks among hedge funds (see the video below). CYRX was in 11 hedge funds' portfolios at the end of the second quarter of 2019. There were 7 hedge funds in our database with CYRX holdings at the end of the previous quarter. 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
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 take a look at the recent hedge fund action encompassing CryoPort, Inc. (NASDAQ:CYRX).
How are hedge funds trading CryoPort, Inc. (NASDAQ:CYRX)?
At the end of the second quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 57% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CYRX over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CryoPort, Inc. (NASDAQ:CYRX) was held by Millennium Management, which reported holding $5.3 million worth of stock at the end of March. It was followed by Royce & Associates with a $4.4 million position. Other investors bullish on the company included Driehaus Capital, D E Shaw, and OZ Management.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Alyeska Investment Group, managed by Anand Parekh, established the most outsized position in CryoPort, Inc. (NASDAQ:CYRX). Alyeska Investment Group had $0.5 million invested in the company at the end of the quarter. Louis Bacon's Moore Global Investments also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP and Michael Gelband's ExodusPoint Capital.
Let's also examine hedge fund activity in other stocks similar to CryoPort, Inc. (NASDAQ:CYRX). These stocks are Myers Industries, Inc. (NYSE:MYE), Solaris Oilfield Infrastructure, Inc. (NYSE:SOI), Laredo Petroleum Inc (NYSE:LPI), and Gladstone Commercial Corporation (NASDAQ:GOOD). This group of stocks' market valuations are similar to CYRX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MYE,14,112013,0 SOI,14,66032,-2 LPI,14,176652,-4 GOOD,5,69741,-1 Average,11.75,106110,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $17 million in CYRX's case. Myers Industries, Inc. (NYSE:MYE) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 5 bullish hedge fund positions. CryoPort, Inc. (NASDAQ:CYRX) is not the least popular stock in this group but hedge fund interest is still below average. 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CYRX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CYRX investors were disappointed as the stock returned -10.7% 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.