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Do Hedge Funds Love Insulet Corporation (PODD)?

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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Insulet Corporation (NASDAQ:PODD).

Insulet Corporation (NASDAQ:PODD) has seen a decrease in support from the world's most elite money managers recently. Insulet Corporation (NASDAQ:PODD) was in 38 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that PODD isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Kris Jenner - Rock Springs Capital
Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV 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. Keeping this in mind let's take a look at the new hedge fund action surrounding Insulet Corporation (NASDAQ:PODD).

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

At the end of June, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PODD over the last 24 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Viking Global held the most valuable stake in Insulet Corporation (NASDAQ:PODD), which was worth $437.9 million at the end of the second quarter. On the second spot was D1 Capital Partners which amassed $275.1 million worth of shares. Coatue Management, Rock Springs Capital Management, and Fisher Asset Management 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 Great Point Partners allocated the biggest weight to Insulet Corporation (NASDAQ:PODD), around 6.02% of its 13F portfolio. Think Investments is also relatively very bullish on the stock, earmarking 6.02 percent of its 13F equity portfolio to PODD.

Due to the fact that Insulet Corporation (NASDAQ:PODD) has experienced declining sentiment from hedge fund managers, logic holds that there was a specific group of hedge funds that decided to sell off their positions entirely by the end of the second quarter. It's worth mentioning that Ken Griffin's Citadel Investment Group dropped the largest stake of the "upper crust" of funds followed by Insider Monkey, totaling about $489.9 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dropped its stock, about $136.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the second quarter.

Let's check out hedge fund activity in other stocks similar to Insulet Corporation (NASDAQ:PODD). We will take a look at Cincinnati Financial Corporation (NASDAQ:CINF), Teleflex Incorporated (NYSE:TFX), Broadridge Financial Solutions, Inc. (NYSE:BR), M&T Bank Corporation (NYSE:MTB), Charles River Laboratories International Inc. (NYSE:CRL), Warner Music Group Corp. (NASDAQ:WMG), and Shinhan Financial Group Co., Ltd. (NYSE:SHG). This group of stocks' market values are closest to PODD's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CINF,22,780728,0 TFX,30,701718,-3 BR,27,315722,5 MTB,46,539380,10 CRL,44,1217955,2 WMG,29,793609,2 SHG,5,31985,-1 Average,29,625871,2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $626 million. That figure was $1447 million in PODD's case. M&T Bank Corporation (NYSE:MTB) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 5 bullish hedge fund positions. Insulet Corporation (NASDAQ:PODD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PODD is 70.2. 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 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on PODD as the stock returned 6.8% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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