In this article you are going to find out whether hedge funds think NuVasive, Inc. (NASDAQ:NUVA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is NuVasive, Inc. (NASDAQ:NUVA) going to take off soon? The best stock pickers are taking a pessimistic view. The number of bullish hedge fund bets went down by 2 recently. Our calculations also showed that NUVA 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). NUVA was in 24 hedge funds' portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with NUVA positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a lot of metrics stock market investors can use to analyze publicly traded companies. Two of the best metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can trounce the broader indices by a solid amount (see the details here).
[caption id="attachment_745225" align="aligncenter" width="400"] Noam Gottesman of GLG Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's analyze the recent hedge fund action regarding NuVasive, Inc. (NASDAQ:NUVA).
What have hedge funds been doing with NuVasive, Inc. (NASDAQ:NUVA)?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in NUVA a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Ken Griffin's Citadel Investment Group has the biggest position in NuVasive, Inc. (NASDAQ:NUVA), worth close to $63.6 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Ken Fisher of Fisher Asset Management, with a $51.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Cliff Asness's AQR Capital Management, Israel Englander's Millennium Management and Noam Gottesman's GLG Partners. In terms of the portfolio weights assigned to each position Aristeia Capital allocated the biggest weight to NuVasive, Inc. (NASDAQ:NUVA), around 0.19% of its 13F portfolio. BlueCrest Capital Mgmt. is also relatively very bullish on the stock, setting aside 0.18 percent of its 13F equity portfolio to NUVA.
Since NuVasive, Inc. (NASDAQ:NUVA) has witnessed bearish sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of funds that elected to cut their positions entirely last quarter. At the top of the heap, Michael Hintze's CQS Cayman LP dumped the biggest position of the 750 funds monitored by Insider Monkey, totaling about $33.5 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dropped about $20 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as NuVasive, Inc. (NASDAQ:NUVA) but similarly valued. These stocks are VEON Ltd. (NASDAQ:VEON), ANGI Homeservices Inc (NASDAQ:ANGI), Marathon Oil Corporation (NYSE:MRO), and World Wrestling Entertainment, Inc. (NYSE:WWE). This group of stocks' market caps resemble NUVA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VEON,8,18862,-3 ANGI,27,231718,4 MRO,24,93423,-6 WWE,31,374902,1 Average,22.5,179726,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $206 million in NUVA's case. World Wrestling Entertainment, Inc. (NYSE:WWE) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 8 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. 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 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 gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately NUVA wasn't nearly as popular as these 10 stocks and hedge funds that were betting on NUVA were disappointed as the stock returned 23.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.