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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Nevro Corp (NYSE:NVRO).
Is NVRO stock a buy? Nevro Corp (NYSE:NVRO) shareholders have witnessed a decrease in enthusiasm from smart money of late. Nevro Corp (NYSE:NVRO) was in 30 hedge funds' portfolios at the end of December. The all time high for this statistic is 35. There were 34 hedge funds in our database with NVRO holdings at the end of September. Our calculations also showed that NVRO isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kris Jenner of Rock Springs Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we're going to check out the key hedge fund action surrounding Nevro Corp (NYSE:NVRO).
Do Hedge Funds Think NVRO Is A Good Stock To Buy Now?
At the end of December, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NVRO over the last 22 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.
More specifically, D E Shaw was the largest shareholder of Nevro Corp (NYSE:NVRO), with a stake worth $190.3 million reported as of the end of December. Trailing D E Shaw was Perceptive Advisors, which amassed a stake valued at $169.2 million. Redmile Group, Rock Springs Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tiger Eye Capital allocated the biggest weight to Nevro Corp (NYSE:NVRO), around 10.44% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, designating 4.53 percent of its 13F equity portfolio to NVRO.
Seeing as Nevro Corp (NYSE:NVRO) has witnessed falling interest from hedge fund managers, logic holds that there were a few hedgies that elected to cut their positions entirely in the fourth quarter. Intriguingly, Steve Cohen's Point72 Asset Management dropped the biggest stake of all the hedgies tracked by Insider Monkey, worth close to $20.5 million in stock. Efrem Kamen's fund, Pura Vida Investments, also said goodbye to its stock, about $4.4 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds in the fourth quarter.
Let's go over hedge fund activity in other stocks similar to Nevro Corp (NYSE:NVRO). These stocks are FirstService Corporation (TSE:FSV), Continental Resources, Inc. (NYSE:CLR), American Well Corporation (NYSE:AMWL), Tandem Diabetes Care Inc (NASDAQ:TNDM), Sonoco Products Company (NYSE:SON), The AZEK Company Inc. (NYSE:AZEK), and Choice Hotels International, Inc. (NYSE:CHH). This group of stocks' market caps are closest to NVRO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSV,16,232365,4 CLR,29,156196,4 AMWL,19,227459,-6 TNDM,26,231853,-4 SON,20,124098,-9 AZEK,23,261270,-11 CHH,15,120859,-12 Average,21.1,193443,-4.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $193 million. That figure was $860 million in NVRO's case. Continental Resources, Inc. (NYSE:CLR) is the most popular stock in this table. On the other hand Choice Hotels International, Inc. (NYSE:CHH) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Nevro Corp (NYSE:NVRO) is more popular among hedge funds. Our overall hedge fund sentiment score for NVRO is 76.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Unfortunately NVRO wasn't nearly as popular as these 30 stocks and hedge funds that were betting on NVRO were disappointed as the stock returned -16.6% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.