Hedge Funds Are Buying Nevro Corp (NVRO)

In this article we are going to use hedge fund sentiment as a tool and determine whether Nevro Corp (NYSE:NVRO) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Nevro Corp (NYSE:NVRO) has seen an increase in support from the world’s most elite money managers recently. Nevro Corp (NYSE:NVRO) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that NVRO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 check out the fresh hedge fund action surrounding Nevro Corp (NYSE:NVRO).

Do Hedge Funds Think NVRO Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. By comparison, 34 hedge funds held shares or bullish call options in NVRO a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Rock Springs Capital Management, managed by Kris Jenner, Gordon Bussard, Graham McPhail, holds the largest position in Nevro Corp (NYSE:NVRO). Rock Springs Capital Management has a $74 million position in the stock, comprising 1.6% of its 13F portfolio. The second most bullish fund manager is Redmile Group, led by Jeremy Green, holding a $63.2 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Ken Griffin’s Citadel Investment Group and Kevin Molloy’s Iron Triangle Partners. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Nevro Corp (NYSE:NVRO), around 6.74% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, setting aside 2.66 percent of its 13F equity portfolio to NVRO.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Nevro Corp (NYSE:NVRO). Citadel Investment Group had $50.8 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $34.9 million position during the quarter. The other funds with brand new NVRO positions are Dmitry Balyasny’s Balyasny Asset Management, Efrem Kamen’s Pura Vida Investments, and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Let’s now review hedge fund activity in other stocks similar to Nevro Corp (NYSE:NVRO). These stocks are Inari Medical, Inc. (NASDAQ:NARI), Apollo Medical Holdings, Inc. (NASDAQ:AMEH), Cohen & Steers, Inc. (NYSE:CNS), Merit Medical Systems, Inc. (NASDAQ:MMSI), Schneider National, Inc. (NYSE:SNDR), ViaSat, Inc. (NASDAQ:VSAT), and UniFirst Corp (NYSE:UNF). This group of stocks’ market values resemble NVRO’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $329 million. That figure was $572 million in NVRO’s case. Inari Medical, Inc. (NASDAQ:NARI) is the most popular stock in this table. On the other hand Apollo Medical Holdings, Inc. (NASDAQ:AMEH) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Nevro Corp (NYSE:NVRO) is more popular among hedge funds. Our overall hedge fund sentiment score for NVRO is 82.9. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately NVRO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NVRO were disappointed as the stock returned -25.2% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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