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Hedge Funds Never Been This Bullish On Insulet Corporation (PODD)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Insulet Corporation (NASDAQ:PODD) based on that data and determine whether they were really smart about the stock.

Is Insulet Corporation (NASDAQ:PODD) a healthy stock for your portfolio? The best stock pickers were taking an optimistic view. The number of long hedge fund bets advanced by 8 lately. Insulet Corporation (NASDAQ:PODD) was in 44 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PODD 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). There were 36 hedge funds in our database with PODD holdings at the end of March.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. 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. Keeping this in mind we’re going to take a gander at the key hedge fund action surrounding Insulet Corporation (NASDAQ:PODD).

What does smart money think about Insulet Corporation (NASDAQ:PODD)?

At the end of June, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in PODD a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Is PODD A Good Stock To Buy?

The largest stake in Insulet Corporation (NASDAQ:PODD) was held by Coatue Management, which reported holding $282.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $95.3 million position. Other investors bullish on the company included Holocene Advisors, Citadel Investment Group, and Rock Springs Capital Management. In terms of the portfolio weights assigned to each position Think Investments allocated the biggest weight to Insulet Corporation (NASDAQ:PODD), around 8.71% of its 13F portfolio. Coatue Management is also relatively very bullish on the stock, earmarking 2.49 percent of its 13F equity portfolio to PODD.

Consequently, key hedge funds have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, established the largest position in Insulet Corporation (NASDAQ:PODD). Holocene Advisors had $94.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $21.3 million position during the quarter. The following funds were also among the new PODD investors: Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Bhagwan Jay Rao’s Integral Health Asset Management, and Greg Martinez’s Parkman Healthcare Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Insulet Corporation (NASDAQ:PODD) but similarly valued. These stocks are J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), Expeditors International of Washington (NASDAQ:EXPD), Qorvo Inc (NASDAQ:QRVO), Etsy Inc (NASDAQ:ETSY), Genuine Parts Company (NYSE:GPC), Sarepta Therapeutics Inc (NASDAQ:SRPT), and Hewlett Packard Enterprise Company (NYSE:HPE). This group of stocks’ market valuations are similar to PODD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JBHT 24 215950 -1
EXPD 33 443457 2
QRVO 51 1608774 12
ETSY 43 1727421 5
GPC 20 144284 -2
SRPT 39 1148135 6
HPE 31 693633 2
Average 34.4 854522 3.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $855 million. That figure was $985 million in PODD’s case. Qorvo Inc (NASDAQ:QRVO) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 20 bullish hedge fund positions. Insulet Corporation (NASDAQ:PODD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PODD is 78.7. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately PODD wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PODD were disappointed as the stock returned 12.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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