Cantel Medical Corp. (CMD): Hedge Funds In Wait-and-See Mode

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Cantel Medical Corp. (NYSE:CMD).

Hedge fund interest in Cantel Medical Corp. (NYSE:CMD) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CMD to other stocks including Virtu Financial Inc (NASDAQ:VIRT), TreeHouse Foods Inc. (NYSE:THS), and Kennedy-Wilson Holdings Inc (NYSE:KW) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are a large number of gauges stock traders have at their disposal to value stocks. A couple of the less utilized gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the S&P 500 by a solid amount (see the details here).

Justin John Ferayorni - Tamarack Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a gander at the new hedge fund action regarding Cantel Medical Corp. (NYSE:CMD).

What have hedge funds been doing with Cantel Medical Corp. (NYSE:CMD)?

Heading into the fourth quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in CMD a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CMD A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Mark N. Diker’s Diker Management has the number one position in Cantel Medical Corp. (NYSE:CMD), worth close to $87.2 million, corresponding to 56.9% of its total 13F portfolio. On Diker Management’s heels is Select Equity Group, managed by Robert Joseph Caruso, which holds a $30.2 million position; 0.2% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions comprise Justin John Ferayorni’s Tamarack Capital Management, Israel Englander’s Millennium Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Diker Management allocated the biggest weight to Cantel Medical Corp. (NYSE:CMD), around 56.9% of its 13F portfolio. Tamarack Capital Management is also relatively very bullish on the stock, dishing out 2.63 percent of its 13F equity portfolio to CMD.

Since Cantel Medical Corp. (NYSE:CMD) has experienced a decline in interest from the smart money, it’s easy to see that there is a sect of hedge funds that decided to sell off their positions entirely heading into Q4. It’s worth mentioning that Brandon Haley’s Holocene Advisors said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $1.4 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dumped about $0.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Cantel Medical Corp. (NYSE:CMD). We will take a look at Virtu Financial Inc (NASDAQ:VIRT), TreeHouse Foods Inc. (NYSE:THS), Kennedy-Wilson Holdings Inc (NYSE:KW), and Thor Industries, Inc. (NYSE:THO). All of these stocks’ market caps match CMD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VIRT 13 89772 -3
THS 18 241573 1
KW 18 499215 5
THO 24 222357 5
Average 18.25 263229 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $263 million. That figure was $149 million in CMD’s case. Thor Industries, Inc. (NYSE:THO) is the most popular stock in this table. On the other hand Virtu Financial Inc (NASDAQ:VIRT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Cantel Medical Corp. (NYSE:CMD) is even less popular than VIRT. Hedge funds dodged a bullet by taking a bearish stance towards CMD. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CMD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CMD investors were disappointed as the stock returned 2.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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