In this article we are going to use hedge fund sentiment as a tool and determine whether Nevro Corp (NYSE:NVRO) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Nevro Corp (NYSE:NVRO) has seen a decrease in support from the world’s most elite money managers lately. Nevro Corp (NYSE:NVRO) was in 29 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. There were 30 hedge funds in our database with NVRO positions at the end of the fourth quarter. Our calculations also showed that NVRO isn’t among the 30 most popular stocks among hedge funds (click for Q1 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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 let’s check out the new hedge fund action surrounding Nevro Corp (NYSE:NVRO).
Do Hedge Funds Think NVRO Is A Good Stock To Buy Now?
At Q1’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NVRO over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Perceptive Advisors held the most valuable stake in Nevro Corp (NYSE:NVRO), which was worth $113.3 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $106.3 million worth of shares. Redmile Group, Rock Springs Capital Management, and Partner Fund Management 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 Iron Triangle Partners allocated the biggest weight to Nevro Corp (NYSE:NVRO), around 3.19% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, designating 2.31 percent of its 13F equity portfolio to NVRO.
Judging by the fact that Nevro Corp (NYSE:NVRO) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there were a few hedge funds who sold off their full holdings last quarter. At the top of the heap, Arthur B Cohen and Joseph Healey’s Healthcor Management LP sold off the largest investment of the 750 funds monitored by Insider Monkey, worth about $27 million in stock, and Frank Fu’s CaaS Capital was right behind this move, as the fund dropped about $3.7 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Nevro Corp (NYSE:NVRO). These stocks are Xerox Holdings Corporation (NYSE:XRX), SelectQuote, Inc. (NYSE:SLQT), Magnite Inc. (NASDAQ:MGNI), Allegro MicroSystems, Inc. (NASDAQ:ALGM), FTI Consulting, Inc. (NYSE:FCN), Stantec Inc. (NYSE:STN), and Fisker Inc. (NYSE:FSR). All of these stocks’ market caps match NVRO’s market cap.
|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 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $365 million. That figure was $650 million in NVRO’s case. Xerox Holdings Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 9 bullish hedge fund positions. Nevro Corp (NYSE:NVRO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NVRO is 76.5. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on NVRO, though not to the same extent, as the stock returned 17.1% since Q1 (through July 2nd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.