Hedge Funds Are Piling Into Intuitive Surgical, Inc. (ISRG)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Intuitive Surgical, Inc. (NASDAQ:ISRG) to find out whether there were any major changes in hedge funds’ views.

Is Intuitive Surgical, Inc. (NASDAQ:ISRG) a great investment now? Hedge funds were in a bullish mood. The number of bullish hedge fund positions rose by 7 in recent months. Intuitive Surgical, Inc. (NASDAQ:ISRG) was in 60 hedge funds’ portfolios at the end of June. The all time high for this statistic is 53. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ISRG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 53 hedge funds in our database with ISRG positions at the end of the first quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the recent hedge fund action regarding Intuitive Surgical, Inc. (NASDAQ:ISRG).

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

At the end of June, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ISRG over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of Intuitive Surgical, Inc. (NASDAQ:ISRG), with a stake worth $1214.9 million reported as of the end of June. Trailing Fisher Asset Management was Citadel Investment Group, which amassed a stake valued at $291.2 million. Citadel Investment Group, Two Sigma Advisors, and Millennium Management 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 Iron Triangle Partners allocated the biggest weight to Intuitive Surgical, Inc. (NASDAQ:ISRG), around 5.21% of its 13F portfolio. Unio Capital is also relatively very bullish on the stock, setting aside 4.04 percent of its 13F equity portfolio to ISRG.

Consequently, specific money managers were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, assembled the largest position in Intuitive Surgical, Inc. (NASDAQ:ISRG). Alyeska Investment Group had $54.7 million invested in the company at the end of the quarter. Kevin Molloy’s Iron Triangle Partners also made a $50.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Efrem Kamen’s Pura Vida Investments, Ryan Caldwell’s Chiron Investment Management, and Greg Martinez’s Parkman Healthcare Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Intuitive Surgical, Inc. (NASDAQ:ISRG) but similarly valued. These stocks are ServiceNow Inc (NYSE:NOW), Snap Inc. (NYSE:SNAP), Lockheed Martin Corporation (NYSE:LMT), GlaxoSmithKline plc (NYSE:GSK), S&P Global Inc. (NYSE:SPGI), Stryker Corporation (NYSE:SYK), and Micron Technology, Inc. (NASDAQ:MU). This group of stocks’ market valuations resemble ISRG’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 63.9 hedge funds with bullish positions and the average amount invested in these stocks was $4632 million. That figure was $3476 million in ISRG’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand GlaxoSmithKline plc (NYSE:GSK) is the least popular one with only 28 bullish hedge fund positions. Intuitive Surgical, Inc. (NASDAQ:ISRG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ISRG is 65.4. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. A small number of hedge funds were also right about betting on ISRG as the stock returned 10.2% since the end of the second quarter (through 9/27) and outperformed the market by an even larger margin.

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