- Oops!Something went wrong.Please try again later.
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards ResMed Inc. (NYSE:RMD) to find out whether there were any major changes in hedge funds' views.
Is ResMed Inc. (NYSE:RMD) a buy here? Prominent investors were getting more optimistic. The number of bullish hedge fund bets inched up by 2 in recent months. ResMed Inc. (NYSE:RMD) was in 28 hedge funds' portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that RMD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 26 hedge funds in our database with RMD positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to go over the latest hedge fund action regarding ResMed Inc. (NYSE:RMD).
Dmitry Balyasny of Balyasny Asset Management
Do Hedge Funds Think RMD Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 35 hedge funds held shares or bullish call options in RMD a year ago. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Two Sigma Advisors was the largest shareholder of ResMed Inc. (NYSE:RMD), with a stake worth $73.6 million reported as of the end of September. Trailing Two Sigma Advisors was AQR Capital Management, which amassed a stake valued at $64.2 million. Arrowstreet Capital, Bridgewater Associates, and Marshall Wace LLP 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 Motley Fool Asset Management allocated the biggest weight to ResMed Inc. (NYSE:RMD), around 1.48% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, designating 1.32 percent of its 13F equity portfolio to RMD.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest position in ResMed Inc. (NYSE:RMD). Two Sigma Advisors had $73.6 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $14.2 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Jinghua Yan's TwinBeech Capital, and Greg Eisner's Engineers Gate Manager.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as ResMed Inc. (NYSE:RMD) but similarly valued. We will take a look at Republic Services, Inc. (NYSE:RSG), SVB Financial Group (NASDAQ:SIVB), The Travelers Companies Inc (NYSE:TRV), Kinder Morgan Inc (NYSE:KMI), The Allstate Corporation (NYSE:ALL), DiDi Global Inc. (NYSE:DIDI), and Manulife Financial Corporation (NYSE:MFC). All of these stocks' market caps are closest to RMD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RSG,31,1222055,-3 SIVB,45,1207137,-4 TRV,32,433119,-2 KMI,43,1012275,5 ALL,27,821166,-6 DIDI,15,701653,-31 MFC,18,351002,0 Average,30.1,821201,-5.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $821 million. That figure was $396 million in RMD's case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand DiDi Global Inc. (NYSE:DIDI) is the least popular one with only 15 bullish hedge fund positions. ResMed Inc. (NYSE:RMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RMD is 52.7. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately RMD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RMD investors were disappointed as the stock returned 0.5% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Get real-time email alerts: Follow Resmed Inc (NYSE:RMD)
Disclosure: None. This article was originally published at Insider Monkey.