Is CNMD Stock A Buy or Sell?

In this article you are going to find out whether hedge funds think CONMED Corporation (NASDAQ:CNMD) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is CNMD stock a buy? Money managers were in a bearish mood. The number of bullish hedge fund positions were trimmed by 5 in recent months. CONMED Corporation (NASDAQ:CNMD) was in 28 hedge funds’ portfolios at the end of December. The all time high for this statistic is 33. Our calculations also showed that CNMD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 124 percentage points since March 2017 (see the details here).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind let’s view the new hedge fund action surrounding CONMED Corporation (NASDAQ:CNMD).

Do Hedge Funds Think CNMD Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 31 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.

When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the biggest position in CONMED Corporation (NASDAQ:CNMD), worth close to $48.4 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Fisher Asset Management, managed by Ken Fisher, which holds a $35.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Matt Sirovich and Jeremy Mindich’s Scopia Capital, Steve Zheng’s Deepcurrents Investment Group and Kevin Molloy’s Iron Triangle Partners. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to CONMED Corporation (NASDAQ:CNMD), around 4.4% of its 13F portfolio. Iron Triangle Partners is also relatively very bullish on the stock, designating 2.15 percent of its 13F equity portfolio to CNMD.

Judging by the fact that CONMED Corporation (NASDAQ:CNMD) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers who were dropping their positions entirely heading into Q1. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at about $10.9 million in stock, and Vishal Saluja and Pham Quang’s Endurant Capital Management was right behind this move, as the fund dropped about $6.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 5 funds heading into Q1.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CONMED Corporation (NASDAQ:CNMD) but similarly valued. These stocks are ALX Oncology Holdings Inc. (NASDAQ:ALXO), Franklin Electric Co. (NASDAQ:FELE), Vonage Holdings Corp. (NYSE:VG), Evoqua Water Technologies Corp. (NYSE:AQUA), NovaGold Resources Inc. (NYSE:NG), Alkermes Plc (NASDAQ:ALKS), and Sogou Inc. (NYSE:SOGO). This group of stocks’ market values are similar to CNMD’s market value.

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As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $437 million. That figure was $243 million in CNMD’s case. Vonage Holdings Corp. (NYSE:VG) is the most popular stock in this table. On the other hand ALX Oncology Holdings Inc. (NASDAQ:ALXO) is the least popular one with only 15 bullish hedge fund positions. CONMED Corporation (NASDAQ:CNMD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CNMD is 55. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on CNMD as the stock returned 16.2% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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