Madison Funds, an independent investment management firm, published its fourth quarter 2020 “Madison Small Cap Fund” investor letter – a copy of which can be downloaded here. A return of 27.61% was recorded by the fund’s Class Y shares in the fourth quarter of 2020, outperforming its Russell 2500 benchmark that had a 27.41% gain, but below its Russell 2000 index that delivered a 31.37% return in the same period. You can view the complete list of the fund’s Average Annual Total Returns and its top 5 holdings to have a peek at their top bets for 2021.
Madison Small Cap Fund, in their Q4 2020 investor letter, mentioned Globus Medical, Inc. (NYSE: GMED) and emphasized their views on the company. Globus Medical, Inc. is a Pennsylvania-based medical device company that currently has a $6.1 billion market capitalization. Since the beginning of the year, GMED delivered a -6.58% return, while its 12-month gains are still up by 46.54%. As of March 26, 2021, the stock closed at $60.93 per share.
Here is what Madison Small Cap Fund has to say about Globus Medical, Inc. in their Q4 2020 investor letter:
“Healthcare continued its streak of underperformance in the fourth quarter. The biotech industry component of the Russell 2000 was up 34% for the quarter and 53% for the year. While we have become more open to investing in this space where appropriate, we prefer molecular diagnostics given less regulatory risk and better revenue diversification. With the new administration comes a shift in healthcare philosophy. We believe that further access to care and coverage expansion will benefit some parts of the sector. However, the risk of further reimbursement cuts, particularly in pharmaceuticals, will bear monitoring.
Our favorite healthcare stock for 2021 is Globus Medical, a provider of spine implants and robotic solutions in the orthopedic industry. This stock has been a disappointing investment in the three years that we have held it. Though, the company itself has executed extremely well. We think this name is a “coiled spring” in a reopening scenario as management played aggressive offense in 2020. They aggressively have grown their sales force and did not hunker down during the pandemic. Recent quarters suggest that the company has taken considerable share, and this should bear fruit as surgical volumes resume in 2021 and 2022.”
Our calculations show that Globus Medical, Inc. (NYSE: GMED) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Globus Medical, Inc. was in 34 hedge fund portfolios, compared to 33 funds in the third quarter. GMED delivered a -6.72% return in the past 3 months.