Here is What Hedge Funds Think About Insulet Corporation (PODD)
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Insulet Corporation (NASDAQ:PODD) to find out whether there were any major changes in hedge funds' views.
Insulet Corporation (NASDAQ:PODD) was in 39 hedge funds' portfolios at the end of March. The all time high for this statistic is 44. PODD has experienced a decrease in enthusiasm from smart money recently. There were 41 hedge funds in our database with PODD positions at the end of the fourth quarter. Our calculations also showed that PODD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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' 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 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Philippe Laffont of Coatue 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 battery 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. With all of this in mind let's take a peek at the recent hedge fund action surrounding Insulet Corporation (NASDAQ:PODD).
Do Hedge Funds Think PODD Is A Good Stock To Buy Now?
At the end of March, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PODD over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Andreas Halvorsen's Viking Global has the number one position in Insulet Corporation (NASDAQ:PODD), worth close to $270.3 million, amounting to 0.8% of its total 13F portfolio. The second most bullish fund manager is Philippe Laffont of Coatue Management, with a $252.4 million position; 1.4% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism contain Ken Griffin's Citadel Investment Group, Paul Marshall and Ian Wace's Marshall Wace LLP and Lone Pine Capital. In terms of the portfolio weights assigned to each position Think Investments allocated the biggest weight to Insulet Corporation (NASDAQ:PODD), around 7.4% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, earmarking 4.83 percent of its 13F equity portfolio to PODD.
Since Insulet Corporation (NASDAQ:PODD) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of hedgies who sold off their full holdings heading into Q2. Interestingly, Renaissance Technologies sold off the largest stake of the "upper crust" of funds watched by Insider Monkey, comprising close to $55.6 million in stock, and Brandon Haley's Holocene Advisors was right behind this move, as the fund dumped about $49.5 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds heading into Q2.
Let's now review hedge fund activity in other stocks similar to Insulet Corporation (NASDAQ:PODD). We will take a look at Tyler Technologies, Inc. (NYSE:TYL), TransUnion (NYSE:TRU), Wheaton Precious Metals Corp. (NYSE:WPM), ON Semiconductor Corporation (NASDAQ:ON), Quest Diagnostics Incorporated (NYSE:DGX), Bio-Rad Laboratories, Inc. (NYSE:BIO), and Celanese Corporation (NYSE:CE). 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 TYL,28,522802,-4 TRU,41,2289853,0 WPM,28,439920,-6 ON,41,1279457,-4 DGX,34,485336,-11 BIO,44,890995,2 CE,36,759047,3 Average,36,952487,-2.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $952 million. That figure was $1556 million in PODD's case. Bio-Rad Laboratories, Inc. (NYSE:BIO) is the most popular stock in this table. On the other hand Tyler Technologies, Inc. (NYSE:TYL) is the least popular one with only 28 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 64. 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. 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 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately PODD wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PODD were disappointed as the stock returned 6.7% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Get real-time email alerts: Follow Insulet Corp (NASDAQ:PODD)
Suggested Articles:
Disclosure: None. This article was originally published at Insider Monkey.
