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Hedge Funds Have Never Been This Bullish On Vapotherm, Inc. (VAPO)

Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before last year’s Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Vapotherm, Inc. (NYSE:VAPO) changed recently.

Vapotherm, Inc. (NYSE:VAPO) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that VAPO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most investors, hedge funds are assumed to be slow, old financial vehicles of yesteryear. While there are more than 8000 funds trading at the moment, Our researchers look at the upper echelon of this group, around 750 funds. These hedge fund managers watch over the lion’s share of the hedge fund industry’s total capital, and by paying attention to their first-class picks, Insider Monkey has unsheathed various investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Phill Gross of Adage Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the new hedge fund action regarding Vapotherm, Inc. (NYSE:VAPO).

Hedge fund activity in Vapotherm, Inc. (NYSE:VAPO)

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VAPO over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Is VAPO A Good Stock To Buy?

The largest stake in Vapotherm, Inc. (NYSE:VAPO) was held by Perceptive Advisors, which reported holding $16.7 million worth of stock at the end of September. It was followed by Adage Capital Management with a $9.1 million position. Other investors bullish on the company included Redmile Group, Driehaus Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Vapotherm, Inc. (NYSE:VAPO), around 0.45% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, dishing out 0.3 percent of its 13F equity portfolio to VAPO.

With a general bullishness amongst the heavyweights, key money managers have jumped into Vapotherm, Inc. (NYSE:VAPO) headfirst. Laurion Capital Management, managed by Benjamin A. Smith, assembled the most valuable position in Vapotherm, Inc. (NYSE:VAPO). Laurion Capital Management had $0.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new VAPO position is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s check out hedge fund activity in other stocks similar to Vapotherm, Inc. (NYSE:VAPO). We will take a look at Calithera Biosciences Inc (NASDAQ:CALA), Yatra Online, Inc. (NASDAQ:YTRA), Delta Apparel, Inc. (NYSE:DLA), and Inspired Entertainment, Inc. (NASDAQ:INSE). This group of stocks’ market values resemble VAPO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CALA 12 34142 -3
YTRA 7 42270 0
DLA 2 7416 -1
INSE 6 35260 0
Average 6.75 29772 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $43 million in VAPO’s case. Calithera Biosciences Inc (NASDAQ:CALA) is the most popular stock in this table. On the other hand Delta Apparel, Inc. (NYSE:DLA) is the least popular one with only 2 bullish hedge fund positions. Vapotherm, Inc. (NYSE:VAPO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on VAPO as the stock returned 16.8% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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