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 Catasys, Inc. (NASDAQ:CATS).
Hedge fund interest in Catasys, Inc. (NASDAQ:CATS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CATS to other stocks including Graf Industrial Corp. (NYSE:GRAF), South Plains Financial, Inc. (NASDAQ:SPFI), and MOGU Inc. (NYSE:MOGU) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let's analyze the latest hedge fund action surrounding Catasys, Inc. (NASDAQ:CATS).
How have hedgies been trading Catasys, Inc. (NASDAQ:CATS)?
At Q2's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. By comparison, 1 hedge funds held shares or bullish call options in CATS a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Richard Driehaus's Driehaus Capital has the number one position in Catasys, Inc. (NASDAQ:CATS), worth close to $3.1 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $2.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain Renaissance Technologies, Fred Knoll's Knoll Capital Management and Frederick DiSanto's Ancora Advisors.
Seeing as Catasys, Inc. (NASDAQ:CATS) has faced declining sentiment from hedge fund managers, we can see that there lies a certain "tier" of money managers that decided to sell off their entire stakes by the end of the second quarter. At the top of the heap, Michael Platt and William Reeves's BlueCrest Capital Mgmt. dumped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, comprising about $0.2 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dropped its stock, about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Catasys, Inc. (NASDAQ:CATS) but similarly valued. These stocks are Graf Industrial Corp. (NYSE:GRAF), South Plains Financial, Inc. (NASDAQ:SPFI), MOGU Inc. (NYSE:MOGU), and Select Interior Concepts, Inc. (NASDAQ:SIC). All of these stocks' market caps are similar to CATS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GRAF,12,54469,0 SPFI,8,11760,8 MOGU,3,15294,2 SIC,9,37234,3 Average,8,29689,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $7 million in CATS's case. Graf Industrial Corp. (NYSE:GRAF) is the most popular stock in this table. On the other hand MOGU Inc. (NYSE:MOGU) is the least popular one with only 3 bullish hedge fund positions. Catasys, Inc. (NASDAQ:CATS) 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 CATS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CATS investors were disappointed as the stock returned -18% 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.