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Hedge Funds Are Piling Into Merit Medical Systems, Inc. (MMSI)

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Is Merit Medical Systems, Inc. (NASDAQ:MMSI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Merit Medical Systems, Inc. (NASDAQ:MMSI) the right investment to pursue these days? The best stock pickers were taking a bullish view. The number of bullish hedge fund bets went up by 4 recently. Merit Medical Systems, Inc. (NASDAQ:MMSI) was in 22 hedge funds' portfolios at the end of June. The all time high for this statistic was previously 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MMSI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Ken Fisher of Fisher Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Now let's take a glance at the new hedge fund action regarding Merit Medical Systems, Inc. (NASDAQ:MMSI).

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

At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in MMSI a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Starboard Value LP, managed by Jeffrey Smith, holds the most valuable position in Merit Medical Systems, Inc. (NASDAQ:MMSI). Starboard Value LP has a $232.6 million position in the stock, comprising 4.6% of its 13F portfolio. Coming in second is Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, which holds a $44.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include D. E. Shaw's D E Shaw, Ken Fisher's Fisher Asset Management and Dmitry Balyasny's Balyasny Asset Management. In terms of the portfolio weights assigned to each position Starboard Value LP allocated the biggest weight to Merit Medical Systems, Inc. (NASDAQ:MMSI), around 4.57% of its 13F portfolio. 13D Management is also relatively very bullish on the stock, designating 3.03 percent of its 13F equity portfolio to MMSI.

As aggregate interest increased, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most valuable position in Merit Medical Systems, Inc. (NASDAQ:MMSI). Millennium Management had $13.2 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also initiated a $3.7 million position during the quarter. The following funds were also among the new MMSI investors: Renaissance Technologies, Michael Gelband's ExodusPoint Capital, and Steve Cohen's Point72 Asset Management.

Let's go over hedge fund activity in other stocks similar to Merit Medical Systems, Inc. (NASDAQ:MMSI). We will take a look at AtriCure Inc. (NASDAQ:ATRC), INMODE LTD. (NASDAQ:INMD), ViaSat, Inc. (NASDAQ:VSAT), Riot Blockchain, Inc (NASDAQ:RIOT), Poshmark, Inc. (NASDAQ:POSH), CommVault Systems, Inc. (NASDAQ:CVLT), and GoHealth, Inc. (NASDAQ:GOCO). This group of stocks' market caps are closest to MMSI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATRC,21,242542,7 INMD,26,298204,3 VSAT,22,1260800,-4 RIOT,17,100716,5 POSH,15,57334,1 CVLT,28,693176,5 GOCO,14,483021,-3 Average,20.4,447970,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $448 million. That figure was $389 million in MMSI's case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand GoHealth, Inc. (NASDAQ:GOCO) is the least popular one with only 14 bullish hedge fund positions. Merit Medical Systems, Inc. (NASDAQ:MMSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MMSI is 67.6. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on MMSI as the stock returned 11.8% since the end of Q2 (through 10/22) 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.