Alger, an investment management firm, published its “Alger Mid Cap Focus Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. During the third quarter, the largest portfolio sector weightings were Information Technology and Health Care. The largest sector overweight was Industrials. The portfolio had no exposure to the Utilities or Energy sectors and negligible exposure to the Real Estate and Materials sectors. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Alger, in its Q3 2021 investor letter, mentioned InMode Ltd. (NASDAQ: INMD) and discussed its stance on the firm. InMode Ltd. is an Israel-based innovative medical technologies provider with a $6.3 billion market capitalization. INMD delivered a 250.42% return since the beginning of the year, while its 12-month returns are up by 301.01%. The stock closed at $83.94 per share on October 21, 2021.
Here is what Alger has to say about InMode Ltd. in its Q3 2021 investor letter:
“InMode Ltd. was among the topic contributors to performance. InMode designs, develops, manufactures and commercializes innovative minimally invasive and non-invasive aesthetic medical products. InMode’s platforms harness novel radio frequency (RF) technology to enable emerging minimally invasive procedures that bridge the gap between temporary treatments like facials and more invasive surgical procedures like facelifts across several categories of surgical specialties such as plastic surgery, gynecology, dermatology, ophthalmology and otolaryngology (ear, nose and throat care).
The aesthetics market is seeing strong tailwinds coming out of the Covid-19 pandemic. These tailwinds include the “Zoom effect,” or dissatisfaction with one’s personal appearance after viewing one’s own face on Zoom, which has resulted in more people deciding to undergo aesthetic procedures. De-stigmatization of aesthetics procedures, aided by social media platforms, is also supportive of InMode’s results. Between the strong growth of its existing product lines and the anticipated launch of two new products, investors perceive InMode as being well positioned to capitalize on the broader strength of the aesthetics market, which is a key reason shares outperformed in the third quarter.”
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Based on our calculations, InMode Ltd. (NASDAQ: INMD) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. INMD was in 26 hedge fund portfolios at the end of the first half of 2021, compared to 23 funds in the previous quarter. InMode Ltd. (NASDAQ: INMD) delivered a 48.78% return in the past 3 months.
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 115 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.
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Disclosure: None. This article is originally published at Insider Monkey.
