While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Wright Medical Group N.V. (NASDAQ:WMGI) and see how the stock performed in comparison to hedge funds' consensus picks.
Wright Medical Group N.V. (NASDAQ:WMGI) was in 35 hedge funds' portfolios at the end of September. WMGI shareholders have witnessed an increase in hedge fund sentiment recently. There were 34 hedge funds in our database with WMGI positions at the end of the previous quarter. Our calculations also showed that WMGI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
If you'd ask most stock holders, hedge funds are seen as unimportant, outdated investment tools of years past. While there are more than 8000 funds trading at the moment, We look at the bigwigs of this club, about 750 funds. These hedge fund managers command most of the smart money's total capital, and by keeping track of their unrivaled investments, Insider Monkey has brought to light a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_341400" align="alignnone" width="600"] Samuel Isaly of OrbiMed Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's take a look at the recent hedge fund action regarding Wright Medical Group N.V. (NASDAQ:WMGI).
How have hedgies been trading Wright Medical Group N.V. (NASDAQ:WMGI)?
Heading into the fourth quarter of 2019, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards WMGI over the last 17 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Wright Medical Group N.V. (NASDAQ:WMGI) was held by OrbiMed Advisors, which reported holding $79.2 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $61.9 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Palo Alto Investors. In terms of the portfolio weights assigned to each position Bridger Management allocated the biggest weight to Wright Medical Group N.V. (NASDAQ:WMGI), around 3.84% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, setting aside 3.79 percent of its 13F equity portfolio to WMGI.
As one would reasonably expect, specific money managers were leading the bulls' herd. Bridger Management, managed by Roberto Mignone, assembled the biggest position in Wright Medical Group N.V. (NASDAQ:WMGI). Bridger Management had $46.5 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin's Senator Investment Group also made a $22 million investment in the stock during the quarter. The other funds with brand new WMGI positions are Matt Sirovich and Jeremy Mindich's Scopia Capital, Israel Englander's Millennium Management, and Stephen DuBois's Camber Capital Management.
Let's go over hedge fund activity in other stocks similar to Wright Medical Group N.V. (NASDAQ:WMGI). We will take a look at Sunoco LP (NYSE:SUN), Arco Platform Limited (NASDAQ:ARCE), Vermilion Energy Inc (NYSE:VET), and Cohen & Steers, Inc. (NYSE:CNS). This group of stocks' market values resemble WMGI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SUN,3,6682,-3 ARCE,12,60723,3 VET,10,46500,3 CNS,16,76446,1 Average,10.25,47588,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $706 million in WMGI's case. Cohen & Steers, Inc. (NYSE:CNS) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Wright Medical Group N.V. (NASDAQ:WMGI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately WMGI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on WMGI were disappointed as the stock returned 11.2% so far in 2019 (through 12/23) and trailed 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 65 percent of these stocks already outperformed the market in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.