We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind let's see whether NuVasive, Inc. (NASDAQ:NUVA) represents 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 NuVasive, Inc. (NASDAQ:NUVA) an excellent investment right now? The best stock pickers are getting more bullish. The number of long hedge fund bets increased by 3 recently. Our calculations also showed that NUVA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
At the moment there are a large number of indicators shareholders employ to analyze their holdings. A duo of the most under-the-radar indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top fund managers can outpace the broader indices by a healthy amount (see the details here).
[caption id="attachment_339739" align="aligncenter" width="400"] Ricky Sandler of Eminence Capital[/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 this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Keeping this in mind we're going to go over the new hedge fund action surrounding NuVasive, Inc. (NASDAQ:NUVA).
Hedge fund activity in NuVasive, Inc. (NASDAQ:NUVA)
At the end of the fourth quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in NUVA a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of NuVasive, Inc. (NASDAQ:NUVA), with a stake worth $81 million reported as of the end of September. Trailing Fisher Asset Management was Citadel Investment Group, which amassed a stake valued at $76.6 million. Millennium Management, AQR Capital Management, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Integral Health Asset Management allocated the biggest weight to NuVasive, Inc. (NASDAQ:NUVA), around 2.41% of its 13F portfolio. Voleon Capital is also relatively very bullish on the stock, earmarking 0.71 percent of its 13F equity portfolio to NUVA.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, initiated the biggest position in NuVasive, Inc. (NASDAQ:NUVA). Millennium Management had $37.8 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $20 million investment in the stock during the quarter. The following funds were also among the new NUVA investors: Bhagwan Jay Rao's Integral Health Asset Management, Ian Simm's Impax Asset Management, and Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as NuVasive, Inc. (NASDAQ:NUVA) but similarly valued. These stocks are Weingarten Realty Investors (NYSE:WRI), Coherent, Inc. (NASDAQ:COHR), National Fuel Gas Company (NYSE:NFG), and frontdoor, inc. (NASDAQ:FTDR). 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 WRI,20,175695,-1 COHR,28,325243,9 NFG,26,179051,2 FTDR,37,681826,-2 Average,27.75,340454,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $340 million. That figure was $312 million in NUVA's case. frontdoor, inc. (NASDAQ:FTDR) is the most popular stock in this table. On the other hand Weingarten Realty Investors (NYSE:WRI) is the least popular one with only 20 bullish hedge fund positions. NuVasive, Inc. (NASDAQ:NUVA) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately NUVA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NUVA investors were disappointed as the stock returned -34.2% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.