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. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded ShockWave Medical, Inc. (NASDAQ:SWAV) and determine whether the smart money was really smart about this stock.
Is ShockWave Medical, Inc. (NASDAQ:SWAV) an outstanding stock to buy now? The best stock pickers were reducing their bets on the stock. The number of bullish hedge fund positions decreased by 5 lately. Our calculations also showed that SWAV 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). SWAV was in 10 hedge funds' portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with SWAV holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are assumed to be unimportant, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at the moment, We look at the bigwigs of this group, about 850 funds. Most estimates calculate that this group of people have their hands on most of the hedge fund industry's total asset base, and by shadowing their unrivaled equity investments, Insider Monkey has unearthed numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_745225" align="aligncenter" width="392"] Noam Gottesman of GLG Partners[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to view the fresh hedge fund action surrounding ShockWave Medical, Inc. (NASDAQ:SWAV).
How are hedge funds trading ShockWave Medical, Inc. (NASDAQ:SWAV)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the fourth quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in SWAV a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ShockWave Medical, Inc. (NASDAQ:SWAV) was held by Citadel Investment Group, which reported holding $22.4 million worth of stock at the end of September. It was followed by Redmile Group with a $18.5 million position. Other investors bullish on the company included Millennium Management, Balyasny Asset Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position Copernicus Capital Management allocated the biggest weight to ShockWave Medical, Inc. (NASDAQ:SWAV), around 2.01% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to SWAV.
Due to the fact that ShockWave Medical, Inc. (NASDAQ:SWAV) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of money managers that decided to sell off their entire stakes by the end of the first quarter. At the top of the heap, Steve Cohen's Point72 Asset Management said goodbye to the largest position of the "upper crust" of funds tracked by Insider Monkey, valued at about $7.7 million in stock. Bhagwan Jay Rao's fund, Integral Health Asset Management, also dropped its stock, about $4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 5 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as ShockWave Medical, Inc. (NASDAQ:SWAV) but similarly valued. These stocks are Futu Holdings Limited (NASDAQ:FUTU), Two Harbors Investment Corp (NYSE:TWO), Cedar Fair, L.P. (NYSE:FUN), and Chart Industries, Inc. (NASDAQ:GTLS). All of these stocks' market caps are similar to SWAV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FUTU,3,452,0 TWO,24,32472,4 FUN,10,29631,1 GTLS,21,120048,2 Average,14.5,45651,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $70 million in SWAV's case. Two Harbors Investment Corp (NYSE:TWO) is the most popular stock in this table. On the other hand Futu Holdings Limited (NASDAQ:FUTU) is the least popular one with only 3 bullish hedge fund positions. ShockWave Medical, Inc. (NASDAQ:SWAV) is not the least popular stock in this group but hedge fund interest is still below average. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on SWAV as the stock returned 42.8% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.