Hedge Funds Keep Buying Vapotherm, Inc. (VAPO)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtVapotherm, Inc. (NYSE:VAPO) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Vapotherm, Inc. (NYSE:VAPO) was in 12 hedge funds’ portfolios at the end of the first quarter of 2020. VAPO has experienced an increase in hedge fund interest lately. There were 10 hedge funds in our database with VAPO holdings at the end of the previous quarter. Our calculations also showed that VAPO isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 eyes of most market participants, hedge funds are viewed as unimportant, old investment vehicles of the past. While there are over 8000 funds trading at the moment, Our researchers hone in on the leaders of this group, about 850 funds. These money managers handle bulk of the smart money’s total asset base, and by keeping track of their inimitable equity investments, Insider Monkey has unsheathed several investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

James Flynn Deerfield Management

James E. Flynn of Deerfield Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the new hedge fund action surrounding Vapotherm, Inc. (NYSE:VAPO).

What does smart money think about Vapotherm, Inc. (NYSE:VAPO)?

Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VAPO over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in Vapotherm, Inc. (NYSE:VAPO) was held by Perceptive Advisors, which reported holding $31.4 million worth of stock at the end of September. It was followed by Parian Global Management with a $25.6 million position. Other investors bullish on the company included Millennium Management, Deerfield Management, and Driehaus Capital. In terms of the portfolio weights assigned to each position Parian Global Management allocated the biggest weight to Vapotherm, Inc. (NYSE:VAPO), around 9.03% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, earmarking 2.35 percent of its 13F equity portfolio to VAPO.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Deerfield Management, managed by James E. Flynn, assembled the most outsized position in Vapotherm, Inc. (NYSE:VAPO). Deerfield Management had $10.5 million invested in the company at the end of the quarter. Mark Moore’s ThornTree Capital Partners also made a $8.5 million investment in the stock during the quarter. The following funds were also among the new VAPO investors: Paul Marshall and Ian Wace’s Marshall Wace LLP and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Vapotherm, Inc. (NYSE:VAPO) but similarly valued. These stocks are Magic Software Enterprises Ltd. (NASDAQ:MGIC), Agenus Inc (NASDAQ:AGEN), Despegar.com, Corp. (NYSE:DESP), and First Mid Bancshares, Inc. (NASDAQ:FMBH). All of these stocks’ market caps match VAPO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MGIC 3 4732 0
AGEN 11 45308 0
DESP 16 84039 5
FMBH 5 7113 -1
Average 8.75 35298 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $100 million in VAPO’s case. Despegar.com, Corp. (NYSE:DESP) is the most popular stock in this table. On the other hand Magic Software Enterprises Ltd. (NASDAQ:MGIC) is the least popular one with only 3 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 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on VAPO as the stock returned 117.7% in Q2 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.