Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2018. What do these smart investors think about STAAR Surgical Company (NASDAQ:STAA)?
STAAR Surgical Company (NASDAQ:STAA) investors should pay attention to a decrease in support from the world's most elite money managers in recent months. STAA was in 20 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 24 hedge funds in our database with STAA positions at the end of the previous quarter. Our calculations also showed that STAA 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's go over the new hedge fund action surrounding STAAR Surgical Company (NASDAQ:STAA).
Hedge fund activity in STAAR Surgical Company (NASDAQ:STAA)
At Q4's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STAA over the last 14 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Broadwood Capital held the most valuable stake in STAAR Surgical Company (NASDAQ:STAA), which was worth $342.7 million at the end of the fourth quarter. On the second spot was Palo Alto Investors which amassed $132.4 million worth of shares. Moreover, Renaissance Technologies, Bridger Management, and Millennium Management were also bullish on STAAR Surgical Company (NASDAQ:STAA), allocating a large percentage of their portfolios to this stock.
Since STAAR Surgical Company (NASDAQ:STAA) has experienced a decline in interest from hedge fund managers, it's easy to see that there were a few fund managers that slashed their entire stakes heading into Q3. Interestingly, Israel Englander's Millennium Management sold off the biggest investment of the 700 funds monitored by Insider Monkey, worth close to $4.8 million in stock. Peter Muller's fund, PDT Partners, also cut its stock, about $2.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q3.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as STAAR Surgical Company (NASDAQ:STAA) but similarly valued. These stocks are Alamos Gold Inc (NYSE:AGI), Adient plc (NYSE:ADNT), Fanhua Inc. (NASDAQ:FANH), and Cadence Bancorporation (NYSE:CADE). This group of stocks' market caps are similar to STAA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGI,11,71999,1 ADNT,27,287226,-2 FANH,9,13664,5 CADE,18,117882,-1 Average,16.25,122693,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $598 million in STAA's case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand Fanhua Inc. (NASDAQ:FANH) is the least popular one with only 9 bullish hedge fund positions. STAAR Surgical Company (NASDAQ:STAA) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately STAA wasn't nearly as popular as these 15 stock and hedge funds that were betting on STAA were disappointed as the stock returned -6.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.