Is iRhythm Technologies, Inc. (IRTC) A Good Stock To Buy?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of iRhythm Technologies, Inc. (NASDAQ:IRTC).

Is IRTC a good stock to buy? iRhythm Technologies, Inc. (NASDAQ:IRTC) was in 22 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 26. IRTC has seen an increase in activity from the world’s largest hedge funds of late. There were 19 hedge funds in our database with IRTC positions at the end of the first quarter. Our calculations also showed that IRTC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding iRhythm Technologies, Inc. (NASDAQ:IRTC).

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

At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the first quarter of 2020. By comparison, 21 hedge funds held shares or bullish call options in IRTC a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in iRhythm Technologies, Inc. (NASDAQ:IRTC). Citadel Investment Group has a $61.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Millennium Management, led by Israel Englander, holding a $36.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Renaissance Technologies and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Integral Health Asset Management allocated the biggest weight to iRhythm Technologies, Inc. (NASDAQ:IRTC), around 0.96% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, dishing out 0.84 percent of its 13F equity portfolio to IRTC.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, created the largest position in iRhythm Technologies, Inc. (NASDAQ:IRTC). Point72 Asset Management had $21.3 million invested in the company at the end of the quarter. Efrem Kamen’s Pura Vida Investments also made a $15.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Efrem Kamen’s Pura Vida Investments, Bhagwan Jay Rao’s Integral Health Asset Management, and Joe Milano’s Greenhouse Funds.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as iRhythm Technologies, Inc. (NASDAQ:IRTC) but similarly valued. We will take a look at Inovio Pharmaceuticals Inc (NYSE:INO), ACM Research, Inc. (NASDAQ:ACMR), Carpenter Technology Corporation (NYSE:CRS), Palomar Holdings, Inc. (NASDAQ:PLMR), Docebo Inc. (NASDAQ:DCBO), Nexgen Energy Ltd. (NYSE:NXE), and NMI Holdings Inc (NASDAQ:NMIH). This group of stocks’ market values match IRTC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $215 million in IRTC’s case. NMI Holdings Inc (NASDAQ:NMIH) is the most popular stock in this table. On the other hand Palomar Holdings, Inc. (NASDAQ:PLMR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks iRhythm Technologies, Inc. (NASDAQ:IRTC) is more popular among hedge funds. Our overall hedge fund sentiment score for IRTC is 83.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately IRTC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IRTC were disappointed as the stock returned 2.5% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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