Hedge Funds Are Betting On ICU Medical, Inc. (ICUI)

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards ICU Medical, Inc. (NASDAQ:ICUI) and determine whether hedge funds skillfully traded this stock.

ICU Medical, Inc. (NASDAQ:ICUI) investors should be aware of an increase in activity from the world’s largest hedge funds of late. ICU Medical, Inc. (NASDAQ:ICUI) was in 32 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 35. Our calculations also showed that ICUI isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 21st century investor’s toolkit there are dozens of gauges market participants use to value publicly traded companies. A pair of the best gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the market by a significant amount (see the details here).

Ricky Sandler of Eminence Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s go over the latest hedge fund action surrounding ICU Medical, Inc. (NASDAQ:ICUI).

How have hedgies been trading ICU Medical, Inc. (NASDAQ:ICUI)?

At second quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 28% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ICUI over the last 20 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in ICU Medical, Inc. (NASDAQ:ICUI) was held by Nitorum Capital, which reported holding $75.7 million worth of stock at the end of September. It was followed by Partner Fund Management with a $41.6 million position. Other investors bullish on the company included Redmile Group, Pura Vida Investments, and Woodline Partners. In terms of the portfolio weights assigned to each position Pura Vida Investments allocated the biggest weight to ICU Medical, Inc. (NASDAQ:ICUI), around 4.68% of its 13F portfolio. Tamarack Capital Management is also relatively very bullish on the stock, dishing out 4 percent of its 13F equity portfolio to ICUI.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Redmile Group, managed by Jeremy Green, assembled the most valuable position in ICU Medical, Inc. (NASDAQ:ICUI). Redmile Group had $37.1 million invested in the company at the end of the quarter. Ricky Sandler’s Eminence Capital also made a $15.3 million investment in the stock during the quarter. The following funds were also among the new ICUI investors: Vishal Saluja and Pham Quang’s Endurant Capital Management, Greg Eisner’s Engineers Gate Manager, and Jinghua Yan’s TwinBeech Capital.

Let’s check out hedge fund activity in other stocks similar to ICU Medical, Inc. (NASDAQ:ICUI). We will take a look at Wright Medical Group N.V. (NASDAQ:WMGI), Lattice Semiconductor Corporation (NASDAQ:LSCC), Armstrong World Industries, Inc. (NYSE:AWI), Western Alliance Bancorporation (NYSE:WAL), GW Pharmaceuticals plc (NASDAQ:GWPH), National Fuel Gas Company (NYSE:NFG), and Hutchison China MediTech Limited (NASDAQ:HCM). All of these stocks’ market caps match ICUI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WMGI 38 799962 1
LSCC 19 162880 -7
AWI 34 372376 14
WAL 24 139929 -3
GWPH 18 350605 -3
NFG 22 174710 4
HCM 7 34538 1
Average 23.1 290714 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $304 million in ICUI’s case. Wright Medical Group N.V. (NASDAQ:WMGI) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 7 bullish hedge fund positions. ICU Medical, Inc. (NASDAQ:ICUI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ICUI is 77.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately ICUI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ICUI were disappointed as the stock returned 4.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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