Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of CONMED Corporation (NYSE:CNMD) based on that data.
CONMED Corporation (NYSE:CNMD) investors should pay attention to a decrease in activity from the world's largest hedge funds recently. CNMD was in 29 hedge funds' portfolios at the end of the first quarter of 2020. There were 31 hedge funds in our database with CNMD positions at the end of the previous quarter. Our calculations also showed that CNMD isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_364887" align="aligncenter" width="399"] Kris Jenner of Rock Springs Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a peek at the new hedge fund action regarding CONMED Corporation (NYSE:CNMD).
How have hedgies been trading CONMED Corporation (NYSE:CNMD)?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CNMD over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Healthcor Management LP held the most valuable stake in CONMED Corporation (NYSE:CNMD), which was worth $39.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $31.2 million worth of shares. Point72 Asset Management, Fisher Asset Management, and Polar Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Healthcor Management LP allocated the biggest weight to CONMED Corporation (NYSE:CNMD), around 1.68% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, setting aside 0.43 percent of its 13F equity portfolio to CNMD.
Seeing as CONMED Corporation (NYSE:CNMD) has witnessed a decline in interest from the smart money, logic holds that there was a specific group of fund managers that elected to cut their full holdings by the end of the first quarter. It's worth mentioning that Phill Gross and Robert Atchinson's Adage Capital Management dropped the biggest position of the 750 funds monitored by Insider Monkey, totaling about $10.1 million in stock, and Efrem Kamen's Pura Vida Investments was right behind this move, as the fund sold off about $5.2 million worth. These moves are important to note, as total hedge fund interest fell 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 CONMED Corporation (NYSE:CNMD) but similarly valued. We will take a look at Acadia Healthcare Company Inc (NASDAQ:ACHC), Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), Ambarella Inc (NASDAQ:AMBA), and Sabre Corporation (NASDAQ:SABR). This group of stocks' market values resemble CNMD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACHC,24,272616,-4 AUPH,28,482900,7 AMBA,21,161557,-5 SABR,30,134131,6 Average,25.75,262801,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $263 million. That figure was $207 million in CNMD's case. Sabre Corporation (NASDAQ:SABR) is the most popular stock in this table. On the other hand Ambarella Inc (NASDAQ:AMBA) is the least popular one with only 21 bullish hedge fund positions. CONMED Corporation (NYSE:CNMD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on CNMD as the stock returned 28.2% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.