Hedge Funds Aren’t Crazy About CONMED Corporation (CNMD) Anymore

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding CONMED Corporation (NYSE:CNMD).

CONMED Corporation (NYSE:CNMD) has seen a decrease in hedge fund sentiment lately. CONMED Corporation (NYSE:CNMD) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that CNMD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are plenty of gauges market participants use to analyze publicly traded companies. Some of the most useful gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace their index-focused peers by a solid margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Keeping this in mind let’s take a glance at the fresh hedge fund action encompassing CONMED Corporation (NYSE:CNMD).

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

Heading into the second quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CNMD over the last 23 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.

When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in CONMED Corporation (NYSE:CNMD), worth close to $40.4 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Healthcor Management LP, led by Arthur B Cohen and Joseph Healey, holding a $36.2 million position; 1.3% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions comprise Steve Zheng’s Deepcurrents Investment Group, Kevin Molloy’s Iron Triangle Partners and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to CONMED Corporation (NYSE:CNMD), around 3.32% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, earmarking 1.28 percent of its 13F equity portfolio to CNMD.

Since CONMED Corporation (NYSE:CNMD) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of money managers that elected to cut their positions entirely heading into Q2. At the top of the heap, Matt Sirovich and Jeremy Mindich’s Scopia Capital sold off the largest stake of all the hedgies watched by Insider Monkey, comprising an estimated $34.8 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund dropped about $11.2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 5 funds heading into Q2.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CONMED Corporation (NYSE:CNMD) but similarly valued. These stocks are Wingstop Inc (NASDAQ:WING), Tenable Holdings, Inc. (NASDAQ:TENB), Advantage Solutions Inc. (NASDAQ:ADV), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), GoHealth, Inc. (NASDAQ:GOCO), Kinsale Capital Group, Inc. (NASDAQ:KNSL), and Olo Inc. (NYSE:OLO). This group of stocks’ market valuations are similar to CNMD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WING 23 233958 -5
TENB 32 532519 -7
ADV 24 605969 5
AJRD 30 786292 -6
GOCO 17 549530 -1
KNSL 17 49810 0
OLO 21 85960 21
Average 23.4 406291 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $406 million. That figure was $237 million in CNMD’s case. Tenable Holdings, Inc. (NASDAQ:TENB) is the most popular stock in this table. On the other hand GoHealth, Inc. (NASDAQ:GOCO) is the least popular one with only 17 bullish hedge fund positions. CONMED Corporation (NYSE:CNMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNMD is 40.9. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately CNMD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CNMD investors were disappointed as the stock returned -1% since the end of March (through 7/16) 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 in 2021.

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