We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards CONMED Corporation (NYSE:CNMD) and determine whether hedge funds skillfully traded this stock.
CONMED Corporation (NYSE:CNMD) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistics is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CNMD investors should be aware of an increase in hedge fund interest lately. There were 29 hedge funds in our database with CNMD holdings at the end of March. Our calculations also showed that CNMD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are tons of methods market participants employ to grade stocks. A couple of the best methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the best fund managers can beat their index-focused peers by a healthy margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 we’re going to take a peek at the latest hedge fund action surrounding CONMED Corporation (NYSE:CNMD).
What have hedge funds been doing with CONMED Corporation (NYSE:CNMD)?
At second quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in CNMD a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in CONMED Corporation (NYSE:CNMD) was held by Point72 Asset Management, which reported holding $82.3 million worth of stock at the end of September. It was followed by Scopia Capital with a $46.6 million position. Other investors bullish on the company included Millennium Management, Fisher Asset Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to CONMED Corporation (NYSE:CNMD), around 5.13% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, setting aside 1.5 percent of its 13F equity portfolio to CNMD.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, assembled the most valuable position in CONMED Corporation (NYSE:CNMD). Scopia Capital had $46.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $14.6 million position during the quarter. The other funds with new positions in the stock are Steve Zheng’s Deepcurrents Investment Group, Efrem Kamen’s Pura Vida Investments, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s also examine hedge fund activity in other stocks similar to CONMED Corporation (NYSE:CNMD). We will take a look at Steven Madden, Ltd. (NASDAQ:SHOO), Installed Building Products Inc (NYSE:IBP), Synaptics Incorporated (NASDAQ:SYNA), Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), Outfront Media Inc (REIT) (NYSE:OUT), Tower Semiconductor Ltd. (NASDAQ:TSEM), and Worthington Industries, Inc. (NYSE:WOR). This group of stocks’ market values resemble CNMD’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $205 million. That figure was $300 million in CNMD’s case. Outfront Media Inc (REIT) (NYSE:OUT) is the most popular stock in this table. On the other hand Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) is the least popular one with only 11 bullish hedge fund positions. CONMED Corporation (NYSE:CNMD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CNMD is 74. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Hedge funds were also right about betting on CNMD as the stock returned 20.8% during Q3 (through September 14th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.