Is Strata Skin Sciences, Inc. (NASDAQ:SSKN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Strata Skin Sciences, Inc. (NASDAQ:SSKN) a splendid investment now? The best stock pickers were in a bearish mood. The number of bullish hedge fund positions shrunk by 1 in recent months. Strata Skin Sciences, Inc. (NASDAQ:SSKN) was in 3 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 6. Our calculations also showed that SSKN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 4 hedge funds in our database with SSKN holdings at the end of December.
According to most shareholders, hedge funds are perceived as unimportant, old financial vehicles of years past. While there are greater than 8000 funds with their doors open today, Our researchers look at the aristocrats of this group, around 850 funds. It is estimated that this group of investors preside over bulk of the hedge fund industry's total asset base, and by observing their top equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically beaten the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. 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 .
Wil Harkey of Nantahala Capital Management
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. Keeping this in mind let's go over the new hedge fund action encompassing Strata Skin Sciences, Inc. (NASDAQ:SSKN).
Do Hedge Funds Think SSKN Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SSKN over the last 23 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Nantahala Capital Management held the most valuable stake in Strata Skin Sciences, Inc. (NASDAQ:SSKN), which was worth $7.7 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $2.3 million worth of shares. Cannell Capital was 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 Cannell Capital allocated the biggest weight to Strata Skin Sciences, Inc. (NASDAQ:SSKN), around 0.48% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to SSKN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Kent Lake Capital. 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 none of the 750+ hedge funds tracked by Insider Monkey identified SSKN as a viable investment and initiated a position in the stock.
Let's now take a look at hedge fund activity in other stocks similar to Strata Skin Sciences, Inc. (NASDAQ:SSKN). We will take a look at Kentucky First Federal Bancorp (NASDAQ:KFFB), FlexShopper, Inc. (NASDAQ:FPAY), Enveric Biosciences, Inc. (NASDAQ:ENVB), Kelso Technologies Inc (NYSE:KIQ), Alimera Sciences Inc (NASDAQ:ALIM), Jianpu Technology Inc. (NYSE:JT), and Idera Pharmaceuticals Inc (NASDAQ:IDRA). This group of stocks' market valuations are similar to SSKN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KFFB,2,563,1 FPAY,1,1810,-2 ENVB,2,182,1 KIQ,1,38,-1 ALIM,9,9345,4 JT,3,1386,1 IDRA,7,4019,-3 Average,3.6,2478,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $12 million in SSKN's case. Alimera Sciences Inc (NASDAQ:ALIM) is the most popular stock in this table. On the other hand FlexShopper, Inc. (NASDAQ:FPAY) is the least popular one with only 1 bullish hedge fund positions. Strata Skin Sciences, Inc. (NASDAQ:SSKN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SSKN is 31.5. 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 SSKN wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SSKN investors were disappointed as the stock returned -13.2% 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.