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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards NuVasive, Inc. (NASDAQ:NUVA).
Is NUVA stock a buy? Hedge funds were becoming less confident. The number of bullish hedge fund positions were trimmed by 1 in recent months. NuVasive, Inc. (NASDAQ:NUVA) was in 25 hedge funds' portfolios at the end of December. The all time high for this statistic is 37. Our calculations also showed that NUVA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 26 hedge funds in our database with NUVA positions at the end of the third quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
James E. Flynn of Deerfield Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's take a gander at the recent hedge fund action encompassing NuVasive, Inc. (NASDAQ:NUVA).
Do Hedge Funds Think NUVA Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in NUVA a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in NuVasive, Inc. (NASDAQ:NUVA) was held by Deerfield Management, which reported holding $201.3 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $70.5 million position. Other investors bullish on the company included Fisher Asset Management, Deerfield Management, and Armistice Capital. In terms of the portfolio weights assigned to each position Deerfield Management allocated the biggest weight to NuVasive, Inc. (NASDAQ:NUVA), around 3.98% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, earmarking 1.36 percent of its 13F equity portfolio to NUVA.
Since NuVasive, Inc. (NASDAQ:NUVA) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of fund managers who were dropping their positions entirely in the fourth quarter. Interestingly, Ken Griffin's Citadel Investment Group dumped the biggest investment of all the hedgies tracked by Insider Monkey, totaling an estimated $73.2 million in stock. Mark Coe's fund, Intrinsic Edge Capital, also dumped its stock, about $10.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the fourth quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as NuVasive, Inc. (NASDAQ:NUVA) but similarly valued. These stocks are PJT Partners Inc (NYSE:PJT), 2U Inc (NASDAQ:TWOU), Apple Hospitality REIT Inc (NYSE:APLE), ExlService Holdings, Inc. (NASDAQ:EXLS), Walker & Dunlop Inc. (NYSE:WD), bluebird bio Inc (NASDAQ:BLUE), and Federated Hermes, Inc. (NYSE:FHI). This group of stocks' market valuations resemble NUVA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PJT,22,87241,6 TWOU,22,856960,-3 APLE,16,136106,2 EXLS,16,52895,-2 WD,19,80881,2 BLUE,28,244540,-7 FHI,33,187644,4 Average,22.3,235181,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.3 hedge funds with bullish positions and the average amount invested in these stocks was $235 million. That figure was $504 million in NUVA's case. Federated Hermes, Inc. (NYSE:FHI) is the most popular stock in this table. On the other hand Apple Hospitality REIT Inc (NYSE:APLE) is the least popular one with only 16 bullish hedge fund positions. NuVasive, Inc. (NASDAQ:NUVA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NUVA is 50.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on NUVA as the stock returned 22% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.