Hedge Funds Are Selling Edwards Lifesciences Corporation (EW)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Edwards Lifesciences Corporation (NYSE:EW).

Edwards Lifesciences Corporation (NYSE:EW) was in 36 hedge funds’ portfolios at the end of March. The all time high for this statistic is 49. EW has seen a decrease in support from the world’s most elite money managers recently. There were 38 hedge funds in our database with EW holdings at the end of December. Our calculations also showed that EW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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 battery 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 we’re going to take a glance at the fresh hedge fund action encompassing Edwards Lifesciences Corporation (NYSE:EW).

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

At the end of the first quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 49 hedge funds with a bullish position in EW a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Edwards Lifesciences Corporation (NYSE:EW) was held by Fisher Asset Management, which reported holding $487 million worth of stock at the end of December. It was followed by D1 Capital Partners with a $101.2 million position. Other investors bullish on the company included OrbiMed Advisors, D E Shaw, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position 11 Capital Partners allocated the biggest weight to Edwards Lifesciences Corporation (NYSE:EW), around 5.12% of its 13F portfolio. Giverny Capital is also relatively very bullish on the stock, setting aside 2.18 percent of its 13F equity portfolio to EW.

Due to the fact that Edwards Lifesciences Corporation (NYSE:EW) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedgies who were dropping their positions entirely last quarter. At the top of the heap, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dropped the largest stake of all the hedgies followed by Insider Monkey, valued at close to $29.3 million in stock. Brandon Haley’s fund, Holocene Advisors, also cut its stock, about $23.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Edwards Lifesciences Corporation (NYSE:EW). These stocks are Honda Motor Co Ltd (NYSE:HMC), Vodafone Group Plc (NASDAQ:VOD), Aon plc (NYSE:AON), Koninklijke Philips NV (NYSE:PHG), General Dynamics Corporation (NYSE:GD), Spotify Technology S.A. (NYSE:SPOT), and KLA Corporation (NASDAQ:KLAC). This group of stocks’ market valuations are closest to EW’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $2744 million. That figure was $1462 million in EW’s case. Aon plc (NYSE:AON) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. Edwards Lifesciences Corporation (NYSE:EW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EW is 45.5. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on EW as the stock returned 23.8% since the end of Q1 (through 6/25) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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