In this article we will take a look at whether hedge funds think Chembio Diagnostics Inc (NASDAQ:CEMI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Chembio Diagnostics Inc (NASDAQ:CEMI) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. CEMI has seen a decrease in hedge fund sentiment recently. There were 7 hedge funds in our database with CEMI positions at the end of the second quarter. Our calculations also showed that CEMI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are viewed as unimportant, old financial tools of yesteryear. While there are more than 8000 funds in operation at present, Our experts look at the masters of this club, around 850 funds. It is estimated that this group of investors watch over most of the hedge fund industry's total asset base, and by tracking their matchless equity investments, Insider Monkey has unsheathed several investment strategies that have historically beaten Mr. Market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Chuck Royce of Royce & Associates
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Keeping this in mind we're going to go over the key hedge fund action surrounding Chembio Diagnostics Inc (NASDAQ:CEMI).
How have hedgies been trading Chembio Diagnostics Inc (NASDAQ:CEMI)?
Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -57% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CEMI over the last 21 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Chembio Diagnostics Inc (NASDAQ:CEMI). Royce & Associates has a $2.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish encompass Ken Griffin's Citadel Investment Group, and OZ Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Chembio Diagnostics Inc (NASDAQ:CEMI), around 0.03% of its 13F portfolio. OZ Management is also relatively very bullish on the stock, earmarking 0.0011 percent of its 13F equity portfolio to CEMI.
Because Chembio Diagnostics Inc (NASDAQ:CEMI) has experienced declining sentiment from hedge fund managers, we can see that there is a sect of hedgies that decided to sell off their positions entirely heading into Q4. At the top of the heap, Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management dumped the largest position of all the hedgies followed by Insider Monkey, worth close to $0.8 million in stock, and Nick Thakore's Diametric Capital was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q4.
Let's check out hedge fund activity in other stocks similar to Chembio Diagnostics Inc (NASDAQ:CEMI). These stocks are Goodrich Petroleum Corporation (NYSE:GDP), Blue Apron Holdings, Inc. (NYSE:APRN), Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE), Bellerophon Therapeutics, Inc. (NASDAQ:BLPH), CVR Partners LP (NYSE:UAN), O2Micro International Limited (NASDAQ:OIIM), and Park City Group, Inc. (NASDAQ:PCYG). This group of stocks' market values are similar to CEMI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GDP,5,18855,-1 APRN,7,5757,0 ZYNE,7,2590,-5 BLPH,4,14748,1 UAN,2,7410,-1 OIIM,2,7301,0 PCYG,2,1547,0 Average,4.1,8315,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $3 million in CEMI's case. Blue Apron Holdings, Inc. (NYSE:APRN) is the most popular stock in this table. On the other hand CVR Partners LP (NYSE:UAN) is the least popular one with only 2 bullish hedge fund positions. Chembio Diagnostics Inc (NASDAQ:CEMI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CEMI is 23.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on CEMI, though not to the same extent, as the stock returned 7% since the end of Q3 (through November 23rd) and outperformed the market.
Get real-time email alerts: Follow Chembio Diagnostics Inc. (NASDAQ:CEMI)
Disclosure: None. This article was originally published at Insider Monkey.