Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Hedge fund interest in Masimo Corporation (NASDAQ:MASI) 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 MASI to other stocks including Janus Capital Group Inc (NYSE:JNS), The Wendy’s Company (NASDAQ:WEN), and The Geo Group, Inc. (NYSE:GEO) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s take a peek at the latest action encompassing Masimo Corporation (NASDAQ:MASI).
What have hedge funds been doing with Masimo Corporation (NASDAQ:MASI)?
Heading into the fourth quarter of 2016, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2016. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the number one position in Masimo Corporation (NASDAQ:MASI). D E Shaw has a $35.2 million position in the stock, comprising 0.1% of its 13F portfolio. On D E Shaw’s heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $34.2 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Paul Sinclair’s Blue Jay Capital Management, Principal Global Investors’s Columbus Circle Investors and Robert B. Gillam’s McKinley Capital Management.