How Iradimed Corp (IRMD) Stacks Up Against Its Peers

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Iradimed Corp (NASDAQ:IRMD), and what that likely means for the prospects of the company and its stock.

Iradimed Corp (NASDAQ:IRMD) was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. IRMD has experienced an increase in hedge fund interest lately. There were 5 hedge funds in our database with IRMD positions at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Athersys, Inc. (NASDAQ:ATHX), Electro Scientific Industries, Inc. (NASDAQ:ESIO), and Real Industry Inc (NASDAQ:RELY) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

Hedge fund activity in Iradimed Corp (NASDAQ:IRMD)

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 20% increase from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards IRMD over the last 5 quarters, which spiked in Q4 2015, but has declined slightly since. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert B. Gillam’s McKinley Capital Management has the largest position in Iradimed Corp (NASDAQ:IRMD), worth close to $1.5 million. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $0.9 million position. Other professional money managers that hold long positions consist of Millennium Management, one of the 10 largest hedge funds in the world, Jim Simons’ Renaissance Technologies, and Paul Orlin and Alex Porter’s Amici Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

Consequently, specific money managers have been driving this bullishness. Renaissance Technologies initiated the largest position in Iradimed Corp (NASDAQ:IRMD). Renaissance Technologies had $0.8 million invested in the company at the end of the quarter. Charles Paquelet’s Skylands Capital also made a $0.3 million investment in the stock during the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Iradimed Corp (NASDAQ:IRMD) but similarly valued. We will take a look at Athersys, Inc. (NASDAQ:ATHX), Electro Scientific Industries, Inc. (NASDAQ:ESIO), Real Industry Inc (NASDAQ:RELY), and Bankwell Financial Group Inc (NASDAQ:BWFG). This group of stocks’ market values are similar to IRMD’s market value.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $5 million in IRMD’s case. Electro Scientific Industries, Inc. (NASDAQ:ESIO) is the most popular stock in this table. On the other hand Athersys, Inc. (NASDAQ:ATHX) is the least popular one with only 4 bullish hedge fund positions. Iradimed Corp (NASDAQ:IRMD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ESIO might be a better candidate to consider taking a long position in.

Disclosure: None