Here is What Hedge Funds Think About Heska Corp (HSKA)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Heska Corp (NASDAQ:HSKA) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Heska Corp (NASDAQ:HSKA) has experienced a decrease in hedge fund interest of late. Heska Corp (NASDAQ:HSKA) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistic is 28. There were 28 hedge funds in our database with HSKA holdings at the end of March. Our calculations also showed that HSKA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the eyes of most investors, hedge funds are seen as worthless, outdated investment vehicles of years past. While there are over 8000 funds in operation at present, We hone in on the top tier of this group, around 850 funds. It is estimated that this group of investors direct the majority of the smart money's total asset base, and by tailing their best equity investments, Insider Monkey has revealed a number of investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Phill Gross Adage Capital Phillip Gross
Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Now let's take a peek at the recent hedge fund action surrounding Heska Corp (NASDAQ:HSKA).

Do Hedge Funds Think HSKA Is A Good Stock To Buy Now?

At second quarter's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HSKA over the last 24 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is HSKA A Good Stock To Buy?
Is HSKA A Good Stock To Buy?

Among these funds, Nine Ten Partners held the most valuable stake in Heska Corp (NASDAQ:HSKA), which was worth $201.1 million at the end of the second quarter. On the second spot was Park West Asset Management which amassed $23.8 million worth of shares. G2 Investment Partners Management, Adage Capital Management, and Millennium 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 Nine Ten Partners allocated the biggest weight to Heska Corp (NASDAQ:HSKA), around 21.63% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, setting aside 3.85 percent of its 13F equity portfolio to HSKA.

Due to the fact that Heska Corp (NASDAQ:HSKA) has faced bearish sentiment from the smart money, logic holds that there lies a certain "tier" of funds that decided to sell off their positions entirely heading into Q3. Intriguingly, Matthew L Pinz's Pinz Capital cut the largest position of the 750 funds followed by Insider Monkey, worth close to $5 million in stock, and Frank Fu's CaaS Capital was right behind this move, as the fund sold off about $4.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 8 funds heading into Q3.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Heska Corp (NASDAQ:HSKA) but similarly valued. These stocks are Edgewell Personal Care Company (NYSE:EPC), Holly Energy Partners, L.P. (NYSE:HEP), SiTime Corporation (NASDAQ:SITM), ModivCare Inc. (NASDAQ:MODV), EHang Holdings Limited (NASDAQ:EH), Ultra Clean Holdings Inc (NASDAQ:UCTT), and Canoo Inc. (NASDAQ:GOEV). All of these stocks' market caps resemble HSKA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EPC,20,203597,0 HEP,3,4435,1 SITM,17,178627,-3 MODV,22,519901,8 EH,5,15477,1 UCTT,25,203322,8 GOEV,16,37103,0 Average,15.4,166066,2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $340 million in HSKA's case. Ultra Clean Holdings Inc (NASDAQ:UCTT) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 3 bullish hedge fund positions. Heska Corp (NASDAQ:HSKA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HSKA is 57.1. 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 positive signal but 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately HSKA wasn't nearly as popular as these 5 stocks and hedge funds that were betting on HSKA were disappointed as the stock returned -0.4% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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