It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards LivaNova PLC (NASDAQ:LIVN) changed during the first quarter.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to go over the fresh hedge fund action surrounding LivaNova PLC (NASDAQ:LIVN).
Hedge fund activity in LivaNova PLC (NASDAQ:LIVN)
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in LIVN a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Redmile Group was the largest shareholder of LivaNova PLC (NASDAQ:LIVN), with a stake worth $56.7 million reported as of the end of March. Trailing Redmile Group was Point72 Asset Management, which amassed a stake valued at $43.9 million. Millennium Management, Renaissance Technologies, and Fisher Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that LivaNova PLC (NASDAQ:LIVN) has faced falling interest from the smart money, we can see that there exists a select few hedge funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Arthur B Cohen and Joseph Healey's Healthcor Management LP said goodbye to the biggest stake of the "upper crust" of funds monitored by Insider Monkey, worth close to $79.9 million in stock. Phill Gross and Robert Atchinson's fund, Adage Capital Management, also said goodbye to its stock, about $16.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as LivaNova PLC (NASDAQ:LIVN) but similarly valued. We will take a look at MGIC Investment Corporation (NYSE:MTG), ViaSat, Inc. (NASDAQ:VSAT), First Citizens BancShares Inc. (NASDAQ:FCNCA), and PLDT Inc. (NYSE:PHI). This group of stocks' market caps are similar to LIVN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTG,32,392959,-3 VSAT,22,2119384,3 FCNCA,18,139967,-4 PHI,5,67170,0 Average,19.25,679870,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $680 million. That figure was $263 million in LIVN's case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 5 bullish hedge fund positions. LivaNova PLC (NASDAQ:LIVN) 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately LIVN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LIVN were disappointed as the stock returned -26.4% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.