Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' recent losses in Facebook. Let’s take a closer look at what the funds we track think about Wright Medical Group N.V. (NASDAQ:WMGI) in this article.
Is Wright Medical Group N.V. (NASDAQ:WMGI) an excellent investment now? The smart money is turning less bullish. The number of long hedge fund bets fell by 2 recently. Our calculations also showed that wmgi isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a look at the key hedge fund action regarding Wright Medical Group N.V. (NASDAQ:WMGI).
What have hedge funds been doing with Wright Medical Group N.V. (NASDAQ:WMGI)?
Heading into the first quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in WMGI a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, OrbiMed Advisors was the largest shareholder of Wright Medical Group N.V. (NASDAQ:WMGI), with a stake worth $133.5 million reported as of the end of September. Trailing OrbiMed Advisors was Millennium Management, which amassed a stake valued at $118.1 million. Fisher Asset Management, Palo Alto Investors, and Redmile Group were also very fond of the stock, giving the stock large weights in their portfolios.
Since Wright Medical Group N.V. (NASDAQ:WMGI) has faced falling interest from hedge fund managers, it's safe to say that there exists a select few funds that decided to sell off their positions entirely by the end of the third quarter. It's worth mentioning that Howard Marks's Oaktree Capital Management sold off the biggest stake of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $17.3 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also cut its stock, about $17 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Wright Medical Group N.V. (NASDAQ:WMGI) but similarly valued. These stocks are Silicon Laboratories Inc. (NASDAQ:SLAB), The Scotts Miracle-Gro Company (NYSE:SMG), Graham Holdings Co (NYSE:GHC), and Performance Food Group Company (NYSE:PFGC). This group of stocks' market caps are similar to WMGI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SLAB,17,58266,3 SMG,20,186663,-3 GHC,19,615026,2 PFGC,18,159221,-5 Average,18.5,254794,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $822 million in WMGI's case. The Scotts Miracle-Gro Company (NYSE:SMG) is the most popular stock in this table. On the other hand Silicon Laboratories Inc. (NASDAQ:SLAB) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Wright Medical Group N.V. (NASDAQ:WMGI) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately WMGI wasn't nearly as popular as these 15 stock and hedge funds that were betting on WMGI were disappointed as the stock returned 3.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.