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Here’s What Hedge Funds Think About CONMED Corporation (CNMD)

Nina Todic

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like CONMED Corporation (NASDAQ:CNMD).

CONMED Corporation (NASDAQ:CNMD) was in 22 hedge funds' portfolios at the end of the third quarter of 2019. CNMD has experienced an increase in activity from the world's largest hedge funds in recent months. There were 19 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 Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_340081" align="aligncenter" width="450"] Phill Gross of Adage Capital Management[/caption]

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the recent hedge fund action encompassing CONMED Corporation (NASDAQ:CNMD).

Hedge fund activity in CONMED Corporation (NASDAQ:CNMD)

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CNMD over the last 17 quarters. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Healthcor Management was the largest shareholder of CONMED Corporation (NASDAQ:CNMD), with a stake worth $41 million reported as of the end of September. Trailing Healthcor Management was Fisher Asset Management, which amassed a stake valued at $35.1 million. Millennium Management, Columbus Circle Investors, and Adage Capital 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 Pura Vida Investments allocated the biggest weight to CONMED Corporation (NASDAQ:CNMD), around 1.6% of its 13F portfolio. Healthcor Management is also relatively very bullish on the stock, dishing out 1.55 percent of its 13F equity portfolio to CNMD.

Now, some big names have been driving this bullishness. Columbus Circle Investors, managed by Principal Global Investors, established the biggest position in CONMED Corporation (NASDAQ:CNMD). Columbus Circle Investors had $24.6 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley's Polar Capital also initiated a $13.9 million position during the quarter. The other funds with brand new CNMD positions are Vishal Saluja and Pham Quang's Endurant Capital Management, David Harding's Winton Capital Management, and Matthew Hulsizer's PEAK6 Capital Management.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as CONMED Corporation (NASDAQ:CNMD) but similarly valued. We will take a look at Herman Miller, Inc. (NASDAQ:MLHR), EQT Corporation (NYSE:EQT), Gol Linhas Aereas Inteligentes S.A. (NYSE:GOL), and Enphase Energy Inc (NASDAQ:ENPH). All of these stocks' market caps match CNMD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MLHR,26,209936,1 EQT,35,442221,0 GOL,11,194286,3 ENPH,32,289899,12 Average,26,284086,4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $202 million in CNMD's case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand Gol Linhas Aereas Inteligentes S.A. (NYSE:GOL) is the least popular one with only 11 bullish hedge fund positions. CONMED Corporation (NASDAQ:CNMD) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on CNMD as the stock returned 17.8% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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