Here’s Why Intuitive Surgical (ISRG) Became One of Ensemble Capital’s Top Performers

Ensemble Capital, an investment management firm, published its “Ensemble Fund” second quarter 2021 investor letter – a copy of which can be seen here.  A quarterly portfolio net return of 6.93% was recorded by the fund for the second quarter of 2021, below the S&P Midcap 500 Index that delivered an 8.55% gains for the same period. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Ensemble Capital, the fund mentioned Intuitive Surgical, Inc. (NASDAQ: ISRG), and discussed its stance on the firm. Intuitive Surgical, Inc. is a Sunnyvale, California-based medical robotic products manufacturer, that currently has an $111.8 billion market capitalization. ISRG delivered a 15.50% return since the beginning of the year, while its 12-month revenues are up by 38.69%. The stock closed at $944.94 per share on July 19, 2021.

Here is what Ensemble Capital has to say about Intuitive Surgical, Inc. in its Q2 2021 investor letter:

Intuitive Surgical: With so called elective surgeries postponed during COVID, the company reported stronger than expected procedures on their April earnings call. In addition, despite existing robotic surgery systems not yet returning to being fully utilized, new orders also surprised to the upside as hospitals placed orders in anticipation of delayed surgeries coming back quickly as the number of COVID patients filling up hospital capacity fades. The stock rallied 24% in the quarter. While the cadence of procedure growth and new system placements may continue to be impacted by COVID trends, particularly outside the US, we believe hospitals will continue to shift more procedures to Intuitive’s robotic surgery systems as they seek to lower the total cost of care and improve patient outcomes.


Based on our calculations, Intuitive Surgical, Inc. (NASDAQ: ISRG) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Intuitive Surgical, Inc. was in 53 hedge fund portfolios at the end of the first quarter of 2021, compared to 49 funds in the fourth quarter of 2020. ISRG delivered a  6.01% 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.