Is ICU Medical, Inc. (ICUI) Going to Burn These Hedge Funds?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded ICU Medical, Inc. (NASDAQ:ICUI) based on those filings.

ICU Medical, Inc. (NASDAQ:ICUI) was in 25 hedge funds’ portfolios at the end of March. ICUI has experienced an increase in hedge fund interest lately. There were 17 hedge funds in our database with ICUI positions at the end of the previous quarter. Our calculations also showed that ICUI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 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.

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the latest hedge fund action encompassing ICU Medical, Inc. (NASDAQ:ICUI).

What have hedge funds been doing with ICU Medical, Inc. (NASDAQ:ICUI)?

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 47% from the fourth quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in ICUI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the most valuable position in ICU Medical, Inc. (NASDAQ:ICUI), worth close to $99.3 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Seth Rosen of Nitorum Capital, with a $92.8 million position; the fund has 7.2% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Christopher James’s Partner Fund Management, Steve Cohen’s Point72 Asset Management and Efrem Kamen’s Pura Vida Investments. In terms of the portfolio weights assigned to each position Nitorum Capital allocated the biggest weight to ICU Medical, Inc. (NASDAQ:ICUI), around 7.19% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, earmarking 6.52 percent of its 13F equity portfolio to ICUI.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in ICU Medical, Inc. (NASDAQ:ICUI). Millennium Management had $10.2 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also made a $3.9 million investment in the stock during the quarter. The following funds were also among the new ICUI investors: Michael Gelband’s ExodusPoint Capital, Brad Farber’s Atika Capital, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ICU Medical, Inc. (NASDAQ:ICUI) but similarly valued. These stocks are United Therapeutics Corporation (NASDAQ:UTHR), Diamondback Energy Inc (NASDAQ:FANG), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), and China Biologic Products Holdings Inc (NASDAQ:CBPO). This group of stocks’ market caps match ICUI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $576 million. That figure was $377 million in ICUI’s case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand China Biologic Products Holdings Inc (NASDAQ:CBPO) is the least popular one with only 16 bullish hedge fund positions. ICU Medical, Inc. (NASDAQ:ICUI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately ICUI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ICUI were disappointed as the stock returned -8.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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