Headwaters Capital Management, an investment management firm that was recently founded last September 2020, published its first quarterly letter, the HCM Q4 2020 Investor Letter – a copy of which can be downloaded here. The portfolio is composed of 25 stocks that went live in 2020, that’s why no investment performance was discussed in the initial letter hence, only the reasons behind the fund’s latest stock picks were presented.
Headwaters Capital Management, in their Q4 2020 Investor Letter said that, Inspire Medical Systems, Inc. (NYSE: INSP) grabbed their attention because of the recent favorable events in the company. Inspire Medical Systems, Inc. is a medical innovation company that currently has a $5.9 billion market cap. For the past 3 months, INSP delivered a huge 74.31% return and settled at $220.81 per share at the closing of January 22nd.
Here is what Headwaters Capital Management has to say about Inspire Medical Systems, Inc. in their investor letter:
“I believe 2021 will be the inflection year for INSP given the recent positive coverage decisions by commercial insurance and Medicare combined with improved surgeon reimbursement. Based on the cadence of new surgical center additions, the company has a path to covering 1,500 surgical centers that can perform 36 procedures/year by 2030. Given the product dominance and continued opportunity for market share gains, the company should trade at a premium multiple. Resmed is the dominant CPAP company and currently trades a 30x EBITDA multiple. Assuming a similar multiple for INSP in 2030 and a 40% EBITDA margin would yield 12% annualized returns for shareholders today. Any ability for INSP to reach this mature state faster than 2030 would result in even greater returns for shareholders. While the stock is clearly expensive on any near-term revenue or profitability metric, if you believe in the long-term opportunity for INSP, there is still ample opportunity for outsized shareholder returns. While not expressly considered in my current valuation for the company, there could be upside to my revenue estimates from greater international adoption as well as monetization of the Inspire app
(patient data could be very useful for physicians).”
Last September 2020, we published an article telling that Inspire Medical Systems, Inc. (NYSE: INSP) was in 24 hedge fund portfolios. Its all time high statistics is 25. INSP delivered a massive 173.86% return in the past 12 months.
Our calculations showed that Inspire Medical Systems, Inc. (NYSE: INSP) does not belong to the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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