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Hedge Funds Are Dumping Masimo Corporation (MASI)

Concerns over rising interest rates and expected further rate increases have hit several stocks hard since the end of the third quarter. NASDAQ and Russell 2000 indices are already in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by about 4 percentage points in the first half of the fourth quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Masimo Corporation (NASDAQ:MASI).

Masimo Corporation (NASDAQ:MASI) has experienced a decrease in hedge fund interest of late. MASI was in 28 hedge funds’ portfolios at the end of September. There were 29 hedge funds in our database with MASI positions at the end of the previous quarter. Our calculations also showed that MASI isn’t among the 30 most popular stocks among hedge funds.

In the 21st century investor’s toolkit there are numerous formulas stock market investors can use to evaluate publicly traded companies. Two of the most innovative formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outpace their index-focused peers by a solid margin (see the details here).

Izzy Englander of MILLENNIUM MANAGEMENT

Let’s take a peek at the latest hedge fund action encompassing Masimo Corporation (NASDAQ:MASI).

How are hedge funds trading Masimo Corporation (NASDAQ:MASI)?

At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the second quarter of 2018. By comparison, 23 hedge funds held shares or bullish call options in MASI heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

MASI_dec2018

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander’s Millennium Management has the largest position in Masimo Corporation (NASDAQ:MASI), worth close to $137.5 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Paul Marshall and Ian Wace of Marshall Wace LLP, with a $69 million position; 0.6% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish include Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.

Because Masimo Corporation (NASDAQ:MASI) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedgies who sold off their entire stakes last quarter. Interestingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dropped the largest position of all the hedgies watched by Insider Monkey, comprising an estimated $72.9 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dropped its stock, about $4.1 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Masimo Corporation (NASDAQ:MASI). We will take a look at Crown Holdings, Inc. (NYSE:CCK), American Homes 4 Rent (NYSE:AMH), Columbia Sportswear Company (NASDAQ:COLM), and The Trade Desk, Inc. (NASDAQ:TTD). This group of stocks’ market values resemble MASI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCK 33 901924 6
AMH 20 587084 -3
COLM 23 180220 0
TTD 14 232878 1
Average 22.5 475527 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $476 million. That figure was $503 million in MASI’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand The Trade Desk, Inc. (NASDAQ:TTD) is the least popular one with only 14 bullish hedge fund positions. Masimo Corporation (NASDAQ:MASI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CCK might be a better candidate to consider a long position.

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

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