Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Merit Medical Systems, Inc. (NASDAQ:MMSI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Merit Medical Systems, Inc. (NASDAQ:MMSI) was in 17 hedge funds’ portfolios at the end of March. MMSI investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 18 hedge funds in our database with MMSI holdings at the end of the previous quarter. Our calculations also showed that MMSI isn’t among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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’re going to review the latest hedge fund action surrounding Merit Medical Systems, Inc. (NASDAQ:MMSI).
How are hedge funds trading Merit Medical Systems, Inc. (NASDAQ:MMSI)?
Heading into the second quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards MMSI over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Merit Medical Systems, Inc. (NASDAQ:MMSI) was held by Perceptive Advisors, which reported holding $65.1 million worth of stock at the end of March. It was followed by Partner Fund Management with a $60.4 million position. Other investors bullish on the company included Millennium Management, SG Capital Management, and Royce & Associates.
Due to the fact that Merit Medical Systems, Inc. (NASDAQ:MMSI) has experienced falling interest from the smart money, it’s easy to see that there were a few hedge funds that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that David Lohman’s Diag Capital dumped the biggest stake of the 700 funds monitored by Insider Monkey, valued at about $1.4 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dumped about $0.3 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Merit Medical Systems, Inc. (NASDAQ:MMSI). These stocks are TCF Financial Corporation (NYSE:TCF), Semtech Corporation (NASDAQ:SMTC), Glacier Bancorp, Inc. (NASDAQ:GBCI), and Extended Stay America Inc (NASDAQ:STAY). This group of stocks’ market valuations match MMSI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCF | 22 | 245330 | -1 |
| SMTC | 19 | 139258 | 0 |
| GBCI | 12 | 57597 | 2 |
| STAY | 32 | 522804 | 0 |
| Average | 21.25 | 241247 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $244 million in MMSI’s case. Extended Stay America Inc (NASDAQ:STAY) is the most popular stock in this table. On the other hand Glacier Bancorp, Inc. (NASDAQ:GBCI) is the least popular one with only 12 bullish hedge fund positions. Merit Medical Systems, Inc. (NASDAQ:MMSI) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MMSI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MMSI investors were disappointed as the stock returned -1.1% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
