ResMed Inc. (RMD) Fell Out Of Favor With Hedge Funds

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on ResMed Inc. (NYSE:RMD).

ResMed Inc. (NYSE:RMD) has seen a decrease in activity from the world’s largest hedge funds recently. ResMed Inc. (NYSE:RMD) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. There were 27 hedge funds in our database with RMD positions at the end of the fourth quarter. Our calculations also showed that RMD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. With all of this in mind let’s take a look at the key hedge fund action encompassing ResMed Inc. (NYSE:RMD).

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

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RMD over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in ResMed Inc. (NYSE:RMD) was held by AQR Capital Management, which reported holding $69.5 million worth of stock at the end of December. It was followed by Marshall Wace LLP with a $58.4 million position. Other investors bullish on the company included D E Shaw, Adage Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Motley Fool Asset Management allocated the biggest weight to ResMed Inc. (NYSE:RMD), around 1.15% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, setting aside 1.12 percent of its 13F equity portfolio to RMD.

Because ResMed Inc. (NYSE:RMD) has faced a decline in interest from hedge fund managers, logic holds that there was a specific group of money managers who were dropping their full holdings by the end of the first quarter. At the top of the heap, Nicolai Tangen’s Ako Capital cut the biggest investment of the 750 funds monitored by Insider Monkey, totaling an estimated $75.7 million in stock. Louis Navellier’s fund, Navellier & Associates, also said goodbye to its stock, about $3.9 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ResMed Inc. (NYSE:RMD) but similarly valued. These stocks are KKR & Co Inc. (NYSE:KKR), Old Dominion Freight Line, Inc. (NASDAQ:ODFL), Unity Software Inc. (NYSE:U), Ball Corporation (NYSE:BLL), Lennar Corporation (NYSE:LEN), Teladoc Health, Inc (NYSE:TDOC), and The Kroger Co. (NYSE:KR). All of these stocks’ market caps are closest to RMD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KKR 56 4542794 2
ODFL 40 865894 -10
U 39 6694278 7
BLL 38 1407192 -6
LEN 49 1570352 -3
TDOC 42 3372133 -8
KR 35 3155231 -1
Average 42.7 3086839 -2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.7 hedge funds with bullish positions and the average amount invested in these stocks was $3087 million. That figure was $314 million in RMD’s case. KKR & Co Inc. (NYSE:KKR) is the most popular stock in this table. On the other hand The Kroger Co. (NYSE:KR) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks ResMed Inc. (NYSE:RMD) is even less popular than KR. Our overall hedge fund sentiment score for RMD is 24.4. 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. Hedge funds clearly dropped the ball on RMD as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 July 9th and still beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on RMD as the stock returned 27.9% since Q1 (through July 9th) and outperformed the market by an even larger margin.

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