In this article we will take a look at whether hedge funds think Merit Medical Systems, Inc. (NASDAQ:MMSI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is MMSI a good stock to buy now? Merit Medical Systems, Inc. (NASDAQ:MMSI) has seen an increase in support from the world’s most elite money managers recently. Merit Medical Systems, Inc. (NASDAQ:MMSI) was in 20 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MMSI 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are viewed as slow, old financial tools of years past. While there are more than 8000 funds trading today, Our experts choose to focus on the leaders of this group, about 850 funds. These investment experts manage bulk of all hedge funds’ total capital, and by tracking their best stock picks, Insider Monkey has unsheathed various investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Merit Medical Systems, Inc. (NASDAQ:MMSI).
Do Hedge Funds Think MMSI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in MMSI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Starboard Value LP held the most valuable stake in Merit Medical Systems, Inc. (NASDAQ:MMSI), which was worth $194.2 million at the end of the third quarter. On the second spot was Polar Capital which amassed $29.9 million worth of shares. D E Shaw, Fisher Asset Management, and 13D Management 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 Starboard Value LP allocated the biggest weight to Merit Medical Systems, Inc. (NASDAQ:MMSI), around 5.76% of its 13F portfolio. 13D Management is also relatively very bullish on the stock, designating 2.89 percent of its 13F equity portfolio to MMSI.
As aggregate interest increased, key money managers have jumped into Merit Medical Systems, Inc. (NASDAQ:MMSI) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the most outsized position in Merit Medical Systems, Inc. (NASDAQ:MMSI). Polar Capital had $29.9 million invested in the company at the end of the quarter. Kenneth Squire’s 13D Management also initiated a $6.6 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Donald Sussman’s Paloma Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Merit Medical Systems, Inc. (NASDAQ:MMSI) but similarly valued. These stocks are Advanced Energy Industries, Inc. (NASDAQ:AEIS), Masonite International Corp (NYSE:DOOR), Kennametal Inc. (NYSE:KMT), APi Group Corporation (NYSE:APG), Pretium Resources Inc (NYSE:PVG), Compania Cervecerias Unidas S.A. (NYSE:CCU), and Manchester United PLC (NYSE:MANU). This group of stocks’ market valuations are similar to MMSI’s market valuation.
|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 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $290 million in MMSI’s case. Masonite International Corp (NYSE:DOOR) is the most popular stock in this table. On the other hand Compania Cervecerias Unidas S.A. (NYSE:CCU) is the least popular one with only 5 bullish hedge fund positions. Merit Medical Systems, Inc. (NASDAQ:MMSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MMSI is 70.3. 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 gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on MMSI as the stock returned 23.8% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.