The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtMerit Medical Systems, Inc. (NASDAQ:MMSI) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Merit Medical Systems, Inc. (NASDAQ:MMSI) has seen a decrease in activity from the world’s largest hedge funds in recent months. MMSI was in 11 hedge funds’ portfolios at the end of the first quarter of 2020. There were 17 hedge funds in our database with MMSI holdings at the end of the previous quarter. Our calculations also showed that MMSI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are plenty of indicators market participants use to grade stocks. A pair of the best indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the market by a very impressive amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the new hedge fund action encompassing Merit Medical Systems, Inc. (NASDAQ:MMSI).
Hedge fund activity in Merit Medical Systems, Inc. (NASDAQ:MMSI)
Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -35% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in MMSI a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Starboard Value LP held the most valuable stake in Merit Medical Systems, Inc. (NASDAQ:MMSI), which was worth $151.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $25.7 million worth of shares. Fisher Asset Management, Millennium Management, and Citadel Investment Group 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 Starboard Value LP allocated the biggest weight to Merit Medical Systems, Inc. (NASDAQ:MMSI), around 6.13% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, designating 0.51 percent of its 13F equity portfolio to MMSI.
Judging by the fact that Merit Medical Systems, Inc. (NASDAQ:MMSI) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of hedgies who sold off their positions entirely heading into Q4. Intriguingly, Mark Coe’s Intrinsic Edge Capital dumped the biggest stake of the 750 funds monitored by Insider Monkey, valued at an estimated $8.7 million in stock. Michael Castor’s fund, Sio Capital, also sold off its stock, about $4.7 million worth. These moves are important to note, as total hedge fund interest was cut by 6 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Merit Medical Systems, Inc. (NASDAQ:MMSI). We will take a look at IGM Biosciences, Inc. (NASDAQ:IGMS), Afya Limited (NASDAQ:AFYA), TeleTech Holdings, Inc. (NASDAQ:TTEC), and Chimera Investment Corporation (NYSE:CIM). This group of stocks’ market caps resemble MMSI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $196 million in MMSI’s case. Chimera Investment Corporation (NYSE:CIM) is the most popular stock in this table. On the other hand Afya Limited (NASDAQ:AFYA) is the least popular one with only 8 bullish hedge fund positions. Merit Medical Systems, Inc. (NASDAQ:MMSI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on MMSI as the stock returned 46.1% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.