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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards ReWalk Robotics Ltd. (NASDAQ:RWLK) to find out whether there were any major changes in hedge funds' views.
Is RWLK stock a buy? Hedge fund interest in ReWalk Robotics Ltd. (NASDAQ:RWLK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that RWLK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare RWLK to other stocks including Phunware, Inc. (NASDAQ:PHUN), Marchex, Inc. (NASDAQ:MCHX), and Wayside Technology Group, Inc. (NASDAQ:WSTG) to get a better sense of its popularity.
At the moment there are tons of metrics market participants use to assess their holdings. A pair of the less known metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top fund managers can outclass the market by a significant margin (see the details here). 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 .
Sander Gerber of Hudson Bay Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 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. With all of this in mind let's analyze the recent hedge fund action regarding ReWalk Robotics Ltd. (NASDAQ:RWLK).
Do Hedge Funds Think RWLK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RWLK over the last 23 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Steven Boyd's Armistice Capital has the number one position in ReWalk Robotics Ltd. (NASDAQ:RWLK), worth close to $4.6 million, comprising 0.1% of its total 13F portfolio. Coming in second is Sabby Capital, managed by Hal Mintz, which holds a $3.1 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Ken Griffin's Citadel Investment Group, Sander Gerber's Hudson Bay Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to ReWalk Robotics Ltd. (NASDAQ:RWLK), around 0.61% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, dishing out 0.11 percent of its 13F equity portfolio to RWLK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's check out hedge fund activity in other stocks similar to ReWalk Robotics Ltd. (NASDAQ:RWLK). These stocks are Phunware, Inc. (NASDAQ:PHUN), Marchex, Inc. (NASDAQ:MCHX), Wayside Technology Group, Inc. (NASDAQ:WSTG), Manning and Napier Inc (NYSE:MN), Reading International, Inc. (NASDAQ:RDI), Citizens Holding Company (NASDAQ:CIZN), and Exterran Corporation (NYSE:EXTN). All of these stocks' market caps are similar to RWLK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PHUN,1,42,0 MCHX,6,10432,-1 WSTG,3,10993,1 MN,8,14849,-1 RDI,7,21246,0 CIZN,1,938,0 EXTN,12,7699,4 Average,5.4,9457,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $8 million in RWLK's case. Exterran Corporation (NYSE:EXTN) is the most popular stock in this table. On the other hand Phunware, Inc. (NASDAQ:PHUN) is the least popular one with only 1 bullish hedge fund positions. ReWalk Robotics Ltd. (NASDAQ:RWLK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RWLK is 48.6. 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 RWLK wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RWLK investors were disappointed as the stock returned -19.8% 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.