The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of ResMed Inc. (NYSE:RMD).
ResMed Inc. (NYSE:RMD) was in 33 hedge funds' portfolios at the end of March. RMD has experienced an increase in hedge fund interest of late. There were 21 hedge funds in our database with RMD holdings at the end of the previous quarter. Our calculations also showed that RMD 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26255" align="aligncenter" width="399"] Louis Navellier of Navellier & Associates[/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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. Now we're going to analyze the recent hedge fund action encompassing ResMed Inc. (NYSE:RMD).
What have hedge funds been doing with ResMed Inc. (NYSE:RMD)?
At the end of the first quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 57% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in RMD a year ago. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of ResMed Inc. (NYSE:RMD), with a stake worth $39 million reported as of the end of September. Trailing AQR Capital Management was Adage Capital Management, which amassed a stake valued at $38.9 million. Motley Fool Asset Management, Sensato Capital Management, and PDT Partners 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 Sensato Capital Management allocated the biggest weight to ResMed Inc. (NYSE:RMD), around 8.06% of its 13F portfolio. Motley Fool Asset Management is also relatively very bullish on the stock, earmarking 2.58 percent of its 13F equity portfolio to RMD.
As industrywide interest jumped, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in ResMed Inc. (NYSE:RMD). Millennium Management had $9.3 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker's Woodline Partners also made a $6.8 million investment in the stock during the quarter. The following funds were also among the new RMD investors: Steve Cohen's Point72 Asset Management, Louis Navellier's Navellier & Associates, and Bruce Kovner's Caxton Associates LP.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as ResMed Inc. (NYSE:RMD) but similarly valued. We will take a look at PACCAR Inc (NASDAQ:PCAR), Tyson Foods, Inc. (NYSE:TSN), Ball Corporation (NYSE:BLL), and CRH PLC (NYSE:CRH). All of these stocks' market caps are similar to RMD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PCAR,38,486230,2 TSN,41,906465,-17 BLL,41,697826,-3 CRH,10,131812,5 Average,32.5,555583,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $556 million. That figure was $168 million in RMD's case. Tyson Foods, Inc. (NYSE:TSN) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 10 bullish hedge fund positions. ResMed Inc. (NYSE:RMD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 beat the market by 13.2 percentage points. Unfortunately RMD wasn't nearly as popular as these 10 stocks and hedge funds that were betting on RMD were disappointed as the stock returned 9.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.