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Hedge Funds Aren’t Crazy About ResMed Inc. (NYSE:RMD) Anymore: Hologic Inc. (HOLX), Varian Medical Systems Inc. (VAR)

ResMed Inc. (NYSE:RMD) was in 14 hedge funds’ portfolio at the end of the fourth quarter of 2012. RMD investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 16 hedge funds in our database with RMD holdings at the end of the previous quarter.

ResMed Inc. (NYSE:RMD)

In the eyes of most traders, hedge funds are seen as worthless, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, we look at the aristocrats of this club, close to 450 funds. It is estimated that this group controls most of the hedge fund industry’s total asset base, and by monitoring their highest performing picks, we have uncovered a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Equally as integral, optimistic insider trading activity is a second way to parse down the stock market universe. Just as you’d expect, there are plenty of reasons for an executive to cut shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the useful potential of this strategy if shareholders know where to look (learn more here).

Now, it’s important to take a peek at the latest action surrounding ResMed Inc. (NYSE:RMD).

What does the smart money think about ResMed Inc. (NYSE:RMD)?

At year’s end, a total of 14 of the hedge funds we track were long in this stock, a change of -13% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the biggest position in ResMed Inc. (NYSE:RMD), worth close to $23 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $16 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Joel Greenblatt’s Gotham Asset Management.

Since ResMed Inc. (NYSE:RMD) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there were a few funds who sold off their positions entirely last quarter. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners dropped the biggest investment of the 450+ funds we monitor, valued at close to $3 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds last quarter.

What have insiders been doing with ResMed Inc. (NYSE:RMD)?

Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, ResMed Inc. (NYSE:RMD) has experienced zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to ResMed Inc. (NYSE:RMD). These stocks are Hologic, Inc. (NASDAQ:HOLX), Varian Medical Systems, Inc. (NYSE:VAR), Edwards Lifesciences Corp (NYSE:EW), Smith & Nephew plc (ADR) (NYSE:SNN), and Sirona Dental Systems, Inc. (NASDAQ:SIRO). This group of stocks belong to the medical appliances & equipment industry and their market caps resemble RMD’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Hologic, Inc. (NASDAQ:HOLX) 31 0 9
Varian Medical Systems, Inc. (NYSE:VAR) 16 0 13
Edwards Lifesciences Corp (NYSE:EW) 14 0 9
Smith & Nephew plc (ADR) (NYSE:SNN) 7 0 0
Sirona Dental Systems, Inc. (NASDAQ:SIRO) 23 0 1

With the results exhibited by Insider Monkey’s time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading activity, and ResMed Inc. (NYSE:RMD) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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