We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Alphatec Holdings Inc (NASDAQ:ATEC) based on that data.
Alphatec Holdings Inc (NASDAQ:ATEC) was in 15 hedge funds' portfolios at the end of the first quarter of 2020. ATEC has experienced an increase in hedge fund interest of late. There were 14 hedge funds in our database with ATEC holdings at the end of the previous quarter. Our calculations also showed that ATEC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_728717" align="aligncenter" width="396"] Roger Ibbotson of Zebra Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's review the recent hedge fund action encompassing Alphatec Holdings Inc (NASDAQ:ATEC).
What have hedge funds been doing with Alphatec Holdings Inc (NASDAQ:ATEC)?
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ATEC over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Driehaus Capital was the largest shareholder of Alphatec Holdings Inc (NASDAQ:ATEC), with a stake worth $6.5 million reported as of the end of September. Trailing Driehaus Capital was Archon Capital Management, which amassed a stake valued at $4.4 million. Royce & Associates, Perceptive Advisors, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Alphatec Holdings Inc (NASDAQ:ATEC), around 1.61% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, earmarking 0.6 percent of its 13F equity portfolio to ATEC.
As aggregate interest increased, some big names were breaking ground themselves. Engineers Gate Manager, managed by Greg Eisner, established the largest position in Alphatec Holdings Inc (NASDAQ:ATEC). Engineers Gate Manager had $0.5 million invested in the company at the end of the quarter. Philippe Laffont's Coatue Management also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Roger Ibbotson's Zebra Capital Management.
Let's go over hedge fund activity in other stocks similar to Alphatec Holdings Inc (NASDAQ:ATEC). These stocks are CTO Realty Growth, Inc. (NYSE:CTO), Wins Finance Holdings Inc. (NASDAQ:WINS), MannKind Corporation (NASDAQ:MNKD), and Southern Missouri Bancorp, Inc. (NASDAQ:SMBC). This group of stocks' market values match ATEC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CTO,10,22599,-2 WINS,1,196,0 MNKD,5,2540,-4 SMBC,3,10924,-1 Average,4.75,9065,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $22 million in ATEC's case. CTO Realty Growth, Inc. (NYSE:CTO) is the most popular stock in this table. On the other hand Wins Finance Holdings Inc. (NASDAQ:WINS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Alphatec Holdings Inc (NASDAQ:ATEC) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on ATEC as the stock returned 33.3% so far in Q2 (through June 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.