In this article we will analyze whether LivaNova PLC (NASDAQ:LIVN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
LivaNova PLC (NASDAQ:LIVN) has seen an increase in hedge fund sentiment lately. LivaNova PLC (NASDAQ:LIVN) was in 36 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 28 hedge funds in our database with LIVN positions at the end of the first quarter. Our calculations also showed that LIVN isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 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, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. With all of this in mind we’re going to take a glance at the new hedge fund action encompassing LivaNova PLC (NASDAQ:LIVN).
Do Hedge Funds Think LIVN Is A Good Stock To Buy Now?
At the end of June, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the first quarter of 2020. On the other hand, there were a total of 29 hedge funds with a bullish position in LIVN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Eminence Capital was the largest shareholder of LivaNova PLC (NASDAQ:LIVN), with a stake worth $139.1 million reported as of the end of June. Trailing Eminence Capital was Hawk Ridge Management, which amassed a stake valued at $109.2 million. Paradice Investment Management, Maverick Capital, and Redmile Group 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 Hawk Ridge Management allocated the biggest weight to LivaNova PLC (NASDAQ:LIVN), around 7.84% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, dishing out 4.63 percent of its 13F equity portfolio to LIVN.
As aggregate interest increased, some big names have been driving this bullishness. Sachem Head Capital, managed by Scott Ferguson, established the largest position in LivaNova PLC (NASDAQ:LIVN). Sachem Head Capital had $74.9 million invested in the company at the end of the quarter. Roberto Mignone’s Bridger Management also made a $10.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Arthur B Cohen and Joseph Healey’s Healthcor Management LP, David Einhorn’s Greenlight Capital, and Brian Ashford-Russell and Tim Woolley’s Polar Capital.
Let’s check out hedge fund activity in other stocks similar to LivaNova PLC (NASDAQ:LIVN). We will take a look at Olink Holding AB (publ) (NASDAQ:OLK), Weingarten Realty Investors (NYSE:WRI), Ultrapar Participacoes SA (NYSE:UGP), Summit Materials Inc (NYSE:SUM), Enel Chile S.A. (NYSE:ENIC), TechnipFMC plc (NYSE:FTI), and Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC). This group of stocks’ market values resemble LIVN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OLK | 16 | 116314 | -4 |
| WRI | 20 | 266193 | 6 |
| UGP | 10 | 15951 | 3 |
| SUM | 20 | 110138 | -12 |
| ENIC | 7 | 20092 | 0 |
| FTI | 25 | 442009 | 0 |
| TKC | 7 | 1874 | -1 |
| Average | 15 | 138939 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $902 million in LIVN’s case. TechnipFMC plc (NYSE:FTI) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks LivaNova PLC (NASDAQ:LIVN) is more popular among hedge funds. Our overall hedge fund sentiment score for LIVN is 90. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Unfortunately LIVN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LIVN were disappointed as the stock returned -5.1% since the end of the second quarter (through 10/11) 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 since 2019.
Follow Livanova Plc
Follow Livanova Plc
Suggested Articles:
- 15 Richest People in Canada
- 10 Best Stocks To Buy For 2021
- 20 Best Countries To Invest In Real Estate
Disclosure: None. This article was originally published at Insider Monkey.
