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How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding LiqTech International Inc (NYSE:LIQT).
LiqTech International Inc (NYSE:LIQT) shareholders have witnessed an increase in hedge fund interest lately. LiqTech International Inc (NYSE:LIQT) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 8. Our calculations also showed that LIQT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the eyes of most market participants, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are over 8000 funds trading today, We hone in on the upper echelon of this club, around 850 funds. It is estimated that this group of investors preside over bulk of all hedge funds' total asset base, and by shadowing their finest stock picks, Insider Monkey has unearthed several investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's take a look at the key hedge fund action surrounding LiqTech International Inc (NYSE:LIQT).
Do Hedge Funds Think LIQT Is A Good Stock To Buy Now?
At Q1's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LIQT over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce's Royce & Associates has the most valuable position in LiqTech International Inc (NYSE:LIQT), worth close to $8.3 million, comprising 0.1% of its total 13F portfolio. On Royce & Associates's heels is Roubaix Capital, led by Christopher Hillary, holding a $1.5 million position; 1% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Roubaix Capital allocated the biggest weight to LiqTech International Inc (NYSE:LIQT), around 1.03% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to LIQT.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into LiqTech International Inc (NYSE:LIQT) headfirst. Roubaix Capital, managed by Christopher Hillary, initiated the largest position in LiqTech International Inc (NYSE:LIQT). Roubaix Capital had $1.5 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.3 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks similar to LiqTech International Inc (NYSE:LIQT). These stocks are Harrow Health, Inc. (NASDAQ:HROW), Nymox Pharmaceutical Corporation (NASDAQ:NYMX), GT Biopharma, Inc. (NASDAQ:GTBP), Westwater Resources, Inc. (NASDAQ:WWR), Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH), First Guaranty Bancshares, Inc. (NASDAQ:FGBI), and XpresSpa Group, Inc. (NASDAQ:XSPA). This group of stocks' market values resemble LIQT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HROW,14,45452,-1 NYMX,1,37,0 GTBP,1,191,1 WWR,6,1935,5 AIH,1,261,0 FGBI,1,653,0 XSPA,6,794,0 Average,4.3,7046,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $10 million in LIQT's case. Harrow Health, Inc. (NASDAQ:HROW) is the most popular stock in this table. On the other hand Nymox Pharmaceutical Corporation (NASDAQ:NYMX) is the least popular one with only 1 bullish hedge fund positions. LiqTech International Inc (NYSE:LIQT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LIQT is 24.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately LIQT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LIQT investors were disappointed as the stock returned -9.4% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.