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Were Hedge Funds Right About Souring On Masimo Corporation (MASI)?

We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article, we look at what those funds think of Masimo Corporation (NASDAQ:MASI) based on that data.

Masimo Corporation (NASDAQ:MASI) was in 28 hedge funds’ portfolios at the end of the second quarter of 2019. MASI shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. There were 34 hedge funds in our database with MASI positions at the end of the previous quarter. Our calculations also showed that MASI isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a lot of tools stock market investors put to use to evaluate stocks. Two of the most underrated tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best fund managers can outclass the market by a solid amount (see the details here).

MASI_oct2019

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the new hedge fund action regarding Masimo Corporation (NASDAQ:MASI).

What have hedge funds been doing with Masimo Corporation (NASDAQ:MASI)?

At Q2’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the first quarter of 2019. By comparison, 29 hedge funds held shares or bullish call options in MASI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Roger Ibbotson Zebra Capital

The largest stake in Masimo Corporation (NASDAQ:MASI) was held by AQR Capital Management, which reported holding $132.5 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $40.8 million position. Other investors bullish on the company included Two Sigma Advisors, GLG Partners, and Marshall Wace LLP.

Due to the fact that Masimo Corporation (NASDAQ:MASI) has witnessed a decline in interest from hedge fund managers, we can see that there was a specific group of hedgies that decided to sell off their entire stakes last quarter. It’s worth mentioning that Ken Grossman and Glen Schneider’s SG Capital Management sold off the largest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $15.2 million in stock, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital was right behind this move, as the fund cut about $14.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 6 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Masimo Corporation (NASDAQ:MASI). These stocks are Bunge Limited (NYSE:BG), Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), Voya Financial Inc (NYSE:VOYA), and US Foods Holding Corp. (NYSE:USFD). All of these stocks’ market caps are closest to MASI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BG 31 693472 -4
MBT 8 448588 -5
VOYA 43 1323923 -2
USFD 39 1399158 -1
Average 30.25 966285 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $966 million. That figure was $350 million in MASI’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Mobile TeleSystems Public Joint Stock Company (NYSE:MBT) is the least popular one with only 8 bullish hedge fund positions. Masimo Corporation (NASDAQ:MASI) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MASI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MASI investors were disappointed as the stock returned 0% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.

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

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