Ensemble Capital, an independently-owned investment firm, recently published its first-quarter Ensemble Fund commentary – a copy of which can be downloaded here. During the first quarter of 2020, the Ensemble Fund returned -18.6%, while the benchmark S&P 500 was down 19.6%.
In the said letter, Ensemble Capital highlighted a few stocks and Intuitive Surgical Inc (NASDAQ:ISRG) is one of them. Intuitive Surgical is the industry leader in robotic assisted surgery. Year-to-date, ISRG stock lost 14.0% and on May 4th it had a closing price of $501.99. Its market cap is of $59.3 billion. Here is what Ensemble Capital said:
“Intuitive Surgical, Inc. (4.8% weight in portfolio): Intuitive surgical makes robotic minimally invasive surgical systems and tools. For any of you who have watched a popular medical series in the past 5 years, you’ve probably seen an image of this 4-armed robot hovering over a patient with long pointed tools at their ends.
In a very real sense, Intuitive’s DaVinci surgical robot allows the surgeon to gain bionic powers while improving patient outcomes. From a patient perspective, the use of previously unavailable minimally invasive surgery for traditionally open surgeries means lower infection rates, lower blood loss, quicker recovery, and lower complication rates. For the surgeon, instead of leaning over the patient and using physical strength and stamina to manipulate a patient’s tissue for hours, she sits off to the side looking into a console and controls the robot remotely with her hands and feet, which does all of the manipulation work on patients with precision, better articulation, and haptic feedback. In addition, the 3D HD endoscope attached to one of the robotic arms gives the surgeon “bionic” vision allowing for better magnification and more precise visualization with the help of fluorescent dyes to identify targeted surgical areas. A new set of augmented reality technologies will take visualization further by layering radiologic images over the endoscopic view to further improve surgical performance. AI will take performance even further, assisting surgeons’ real time operative decisions by incorporating historical kinematic data culled from millions of previous cases.
With a two-decade lead in robotic surgical development, over 7 million cumulative procedures conducted, and tens of thousands of surgeons trained and experienced using the DaVinci, Intuitive Surgical is in a unique position in the future of robotically assisted surgery. It is highly profitable, and it has nearly $6B in cash on the balance sheet with no debt. While the pressure of COVID-19 patient care in the near term will impact the performance of all other elective surgeries, we believe the critical nature of most of these (about half are cancer removals) means they can only be delayed for a few months. When hospitals can once again normalize their patient care, Intuitive is likely to see a strong resurgence in growth of its procedures and shipments of new systems to accommodate them.”
In Q4 2019, the number of bullish hedge fund positions on ISRG stock increased by about 13% from the previous quarter (see the chart here).
Disclosure: None. This article is originally published at Insider Monkey.
