The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider TransMedics Group, Inc. (NASDAQ:TMDX) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is TMDX a good stock to buy now? TransMedics Group, Inc. (NASDAQ:TMDX) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TMDX has seen an increase in enthusiasm from smart money of late. There were 6 hedge funds in our database with TMDX holdings at the end of June. Our calculations also showed that TMDX 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with 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. Now let’s take a look at the recent hedge fund action encompassing TransMedics Group, Inc. (NASDAQ:TMDX).
How have hedgies been trading TransMedics Group, Inc. (NASDAQ:TMDX)?
At third quarter’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TMDX over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Abrams Capital Management, managed by David Abrams, holds the largest position in TransMedics Group, Inc. (NASDAQ:TMDX). Abrams Capital Management has a $48.2 million position in the stock, comprising 1.5% of its 13F portfolio. Sitting at the No. 2 spot is Zimmer Partners, led by Stuart J. Zimmer, holding a $6.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism include Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel Investment Group and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Abrams Capital Management allocated the biggest weight to TransMedics Group, Inc. (NASDAQ:TMDX), around 1.52% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to TMDX.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in TransMedics Group, Inc. (NASDAQ:TMDX). Citadel Investment Group had $0.9 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $0.6 million investment in the stock during the quarter. The only other fund with a new position in the stock is Noam Gottesman’s GLG Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as TransMedics Group, Inc. (NASDAQ:TMDX) but similarly valued. We will take a look at Dime Community Bancshares, Inc. (NASDAQ:DCOM), Thermon Group Holdings, Inc. (NYSE:THR), Kamada Ltd (NASDAQ:KMDA), Valhi, Inc. (NYSE:VHI), WiMi Hologram Cloud Inc. (NASDAQ:WIMI), Wins Finance Holdings Inc. (NASDAQ:WINS), and Tejon Ranch Company (NYSE:TRC). All of these stocks’ market caps resemble TMDX’s market cap.
|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 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $58 million in TMDX’s case. Thermon Group Holdings, Inc. (NYSE:THR) is the most popular stock in this table. On the other hand Wins Finance Holdings Inc. (NASDAQ:WINS) is the least popular one with only 1 bullish hedge fund positions. TransMedics Group, Inc. (NASDAQ:TMDX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TMDX is 59.1. 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 31.6% in 2020 through December 2nd and beat the market by 16 percentage points. A small number of hedge funds were also right about betting on TMDX, though not to the same extent, as the stock returned 9.9% since the end of Q3 (through December 2nd) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.