Does Luminex Corporation (NASDAQ:LMNX) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Luminex Corporation (NASDAQ:LMNX) a buy here? Money managers are selling. The number of long hedge fund bets were cut by 4 in recent months. Our calculations also showed that LMNX isn't among the 30 most popular stocks among hedge funds (see the video below). LMNX was in 17 hedge funds' portfolios at the end of the second quarter of 2019. There were 21 hedge funds in our database with LMNX 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.
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.
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 Luminex Corporation (NASDAQ:LMNX).
What have hedge funds been doing with Luminex Corporation (NASDAQ:LMNX)?
At Q2's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LMNX over the last 16 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, RGM Capital held the most valuable stake in Luminex Corporation (NASDAQ:LMNX), which was worth $63.2 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $47.3 million worth of shares. Moreover, Millennium Management, D E Shaw, and Marshall Wace LLP were also bullish on Luminex Corporation (NASDAQ:LMNX), allocating a large percentage of their portfolios to this stock.
Since Luminex Corporation (NASDAQ:LMNX) has experienced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there was a specific group of hedge funds that decided to sell off their positions entirely last quarter. At the top of the heap, Israel Englander's Millennium Management dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, worth close to $4.6 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also said goodbye to its stock, about $4.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Luminex Corporation (NASDAQ:LMNX) but similarly valued. These stocks are MAG Silver Corp. (NYSE:MAG), Pacific Drilling SA (NYSE:PACD), TCG BDC, Inc. (NASDAQ:CGBD), and Zymeworks Inc. (NYSE:ZYME). All of these stocks' market caps resemble LMNX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAG,9,25008,-2 PACD,9,669854,3 CGBD,8,30678,-4 ZYME,14,297349,0 Average,10,255722,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $148 million in LMNX's case. Zymeworks Inc. (NYSE:ZYME) is the most popular stock in this table. On the other hand TCG BDC, Inc. (NASDAQ:CGBD) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Luminex Corporation (NASDAQ:LMNX) is more popular among hedge funds. 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 LMNX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LMNX were disappointed as the stock returned 0.5% 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 in Q3.
Disclosure: None. This article was originally published at Insider Monkey.