The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards TransMedics Group, Inc. (NASDAQ:TMDX).
TransMedics Group, Inc. (NASDAQ:TMDX) investors should be aware of a decrease in hedge fund interest lately. TMDX was in 4 hedge funds' portfolios at the end of September. There were 7 hedge funds in our database with TMDX positions at the end of the previous quarter. Our calculations also showed that TMDX 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.
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 flagship best-performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_27676" align="alignnone" width="355"] Israel Englander of Millennium Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a look at the recent hedge fund action encompassing TransMedics Group, Inc. (NASDAQ:TMDX).
Hedge fund activity in TransMedics Group, Inc. (NASDAQ:TMDX)
At Q3's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -43% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TMDX over the last 17 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David Abrams's Abrams Capital Management has the biggest position in TransMedics Group, Inc. (NASDAQ:TMDX), worth close to $80.4 million, comprising 2.3% of its total 13F portfolio. The second most bullish fund manager is Zimmer Partners, led by Stuart J. Zimmer, holding a $13.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that are bullish encompass Ken Griffin's Citadel Investment Group, Gavin Saitowitz and Cisco J. del Valle's Springbok Capital. In terms of the portfolio weights assigned to each position, Abrams Capital Management allocated the biggest weight to TransMedics Group, Inc. (NASDAQ:TMDX), around 2.25% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to TMDX.
Judging by the fact that TransMedics Group, Inc. (NASDAQ:TMDX) has witnessed falling interest from the smart money, logic holds that there were a few money managers that slashed their full holdings in the third quarter. Interestingly, Benjamin A. Smith's Laurion Capital Management cut the biggest stake of the 750 funds watched by Insider Monkey, totaling an estimated $1.9 million in stock, and Anand Parekh's Alyeska Investment Group was right behind this move, as the fund sold off about $0.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to TransMedics Group, Inc. (NASDAQ:TMDX). These stocks are Loop Industries, Inc. (NASDAQ:LOOP), California Resources Corporation (NYSE:CRC), GameStop Corp. (NYSE:GME), and UroGen Pharma Ltd. (NASDAQ:URGN). This group of stocks' market valuations resembles TMDX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LOOP,2,408,1 CRC,20,105193,8 GME,20,44116,-7 URGN,10,77472,-2 Average,13,56797,0 [/table]
View the table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $95 million in TMDX's case. California Resources Corporation (NYSE:CRC) is the most popular stock in this table. On the other hand Loop Industries, Inc. (NASDAQ:LOOP) is the least popular one with only 2 bullish hedge fund positions. TransMedics Group, Inc. (NASDAQ:TMDX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately, TMDX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TMDX investors were disappointed as the stock returned -21.1% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.