We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Viemed Healthcare, Inc. (NASDAQ:VMD).
Is Viemed Healthcare, Inc. (NASDAQ:VMD) a buy, sell, or hold? Hedge funds are taking a bullish view. The number of long hedge fund bets advanced by 4 in recent months. Our calculations also showed that VMD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). VMD was in 4 hedge funds' portfolios at the end of the third quarter of 2019. There were 0 hedge funds in our database with VMD holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="alignnone" width="600"] Chuck Royce of Royce & Associates[/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. Keeping this in mind we're going to check out the new hedge fund action regarding Viemed Healthcare, Inc. (NASDAQ:VMD).
What does smart money think about Viemed Healthcare, Inc. (NASDAQ:VMD)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4 from the previous quarter. The graph below displays the number of hedge funds with bullish position in VMD over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management has the most valuable position in Viemed Healthcare, Inc. (NASDAQ:VMD), worth close to $10.3 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $0.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Jeffrey Bronchick's Cove Street Capital, Renaissance Technologies and . In terms of the portfolio weights assigned to each position Nantahala Capital Management allocated the biggest weight to Viemed Healthcare, Inc. (NASDAQ:VMD), around 0.38% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, designating 0.09 percent of its 13F equity portfolio to VMD.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Viemed Healthcare, Inc. (NASDAQ:VMD) headfirst. Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, initiated the largest position in Viemed Healthcare, Inc. (NASDAQ:VMD). Nantahala Capital Management had $10.3 million invested in the company at the end of the quarter. Chuck Royce's Royce & Associates also initiated a $0.7 million position during the quarter. The other funds with brand new VMD positions are Jeffrey Bronchick's Cove Street Capital and Renaissance Technologies.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Viemed Healthcare, Inc. (NASDAQ:VMD) but similarly valued. These stocks are Pioneer Floating Rate Trust (NYSE:PHD), Mayville Engineering Company, Inc. (NYSE:MEC), Venator Materials PLC (NYSE:VNTR), and Pacific City Financial Corporation (NASDAQ:PCB). This group of stocks' market values are closest to VMD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PHD,1,25269,-2 MEC,11,19398,2 VNTR,17,35827,-1 PCB,4,27172,2 Average,8.25,26917,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $12 million in VMD's case. Venator Materials PLC (NYSE:VNTR) is the most popular stock in this table. On the other hand Pioneer Floating Rate Trust (NYSE:PHD) is the least popular one with only 1 bullish hedge fund positions. Viemed Healthcare, Inc. (NASDAQ:VMD) 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 VMD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VMD investors were disappointed as the stock returned -10.7% 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.