The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought iRhythm Technologies, Inc. (NASDAQ:IRTC) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
iRhythm Technologies, Inc. (NASDAQ:IRTC) has experienced an increase in hedge fund interest lately. iRhythm Technologies, Inc. (NASDAQ:IRTC) was in 21 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 24. Our calculations also showed that IRTC isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
To the average investor there are numerous gauges investors use to evaluate publicly traded companies. A duo of the most underrated gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top investment managers can outpace the market by a very impressive amount (see the details here).
Noam Gottesman of GLG Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we're going to take a look at the latest hedge fund action encompassing iRhythm Technologies, Inc. (NASDAQ:IRTC).
What does smart money think about iRhythm Technologies, Inc. (NASDAQ:IRTC)?
At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in IRTC a year ago. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Rock Springs Capital Management was the largest shareholder of iRhythm Technologies, Inc. (NASDAQ:IRTC), with a stake worth $75.4 million reported as of the end of September. Trailing Rock Springs Capital Management was Partner Fund Management, which amassed a stake valued at $28.8 million. Sectoral Asset Management, D E Shaw, and Citadel Investment Group 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 Rock Springs Capital Management allocated the biggest weight to iRhythm Technologies, Inc. (NASDAQ:IRTC), around 2.07% of its 13F portfolio. Partner Fund Management is also relatively very bullish on the stock, designating 1.49 percent of its 13F equity portfolio to IRTC.
As one would reasonably expect, key money managers were leading the bulls' herd. GLG Partners, managed by Noam Gottesman, initiated the most valuable position in iRhythm Technologies, Inc. (NASDAQ:IRTC). GLG Partners had $6.6 million invested in the company at the end of the quarter. Principal Global Investors's Columbus Circle Investors also made a $6 million investment in the stock during the quarter. The other funds with brand new IRTC positions are Michael Gelband's ExodusPoint Capital, Cliff Asness's AQR Capital Management, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's go over hedge fund activity in other stocks similar to iRhythm Technologies, Inc. (NASDAQ:IRTC). These stocks are ACI Worldwide Inc (NASDAQ:ACIW), New Jersey Resources Corp (NYSE:NJR), Popular Inc (NASDAQ:BPOP), Penske Automotive Group, Inc. (NYSE:PAG), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), First Horizon National Corporation (NYSE:FHN), and TFI International Inc. (NYSE:TFII). All of these stocks' market caps are closest to IRTC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACIW,22,293577,-2 NJR,14,40053,0 BPOP,33,521258,5 PAG,21,83068,2 AJRD,25,405251,2 FHN,35,384471,4 TFII,10,67009,-2 Average,22.9,256384,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $161 million in IRTC's case. First Horizon National Corporation (NYSE:FHN) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 10 bullish hedge fund positions. iRhythm Technologies, Inc. (NASDAQ:IRTC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IRTC is 58.3. 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. 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on IRTC as the stock returned 105.5% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.