The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of CONMED Corporation (NASDAQ:CNMD).
Is CNMD a good stock to buy? Money managers were becoming hopeful. The number of bullish hedge fund bets inched up by 2 in recent months. CONMED Corporation (NASDAQ:CNMD) was in 33 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CNMD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 31 hedge funds in our database with CNMD holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s go over the recent hedge fund action regarding CONMED Corporation (NASDAQ:CNMD).
Do Hedge Funds Think CNMD Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in CNMD a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Point72 Asset Management held the most valuable stake in CONMED Corporation (NASDAQ:CNMD), which was worth $66.7 million at the end of the third quarter. On the second spot was Scopia Capital which amassed $50.9 million worth of shares. Millennium Management, Fisher Asset Management, and Pura Vida Investments 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 Scopia Capital allocated the biggest weight to CONMED Corporation (NASDAQ:CNMD), around 6.02% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, designating 1.89 percent of its 13F equity portfolio to CNMD.
Consequently, some big names have been driving this bullishness. Endurant Capital Management, managed by Vishal Saluja and Pham Quang, initiated the biggest position in CONMED Corporation (NASDAQ:CNMD). Endurant Capital Management had $6.4 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $5.7 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Ira Unschuld’s Brant Point Investment Management, and Donald Sussman’s Paloma Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CONMED Corporation (NASDAQ:CNMD) but similarly valued. We will take a look at Arco Platform Limited (NASDAQ:ARCE), Strategic Education Inc (NASDAQ:STRA), GATX Corporation (NYSE:GATX), Pactiv Evergreen Inc. (NASDAQ:PTVE), Xencor Inc (NASDAQ:XNCR), Shenandoah Telecommunications Company (NASDAQ:SHEN), and Golub Capital BDC Inc (NASDAQ:GBDC). All of these stocks’ market caps resemble CNMD’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 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $287 million in CNMD’s case. Strategic Education Inc (NASDAQ:STRA) is the most popular stock in this table. On the other hand Shenandoah Telecommunications Company (NASDAQ:SHEN) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks CONMED Corporation (NASDAQ:CNMD) is more popular among hedge funds. Our overall hedge fund sentiment score for CNMD is 87. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on CNMD as the stock returned 40.6% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.