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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. What do these smart investors think about Silk Road Medical, Inc. (NASDAQ:SILK)?
Hedge fund interest in Silk Road Medical, Inc. (NASDAQ:SILK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SILK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare SILK to other stocks including National Storage Affiliates Trust (NYSE:NSA), IGM Biosciences, Inc. (NASDAQ:IGMS), and Coca-Cola Consolidated Inc. (NASDAQ:COKE) to get a better sense of its popularity.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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.
Henrik Rhenman of Rhenman & Partners Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 let's analyze the fresh hedge fund action regarding Silk Road Medical, Inc. (NASDAQ:SILK).
Do Hedge Funds Think SILK Is A Good Stock To Buy Now?
At third quarter's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in SILK a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Silk Road Medical, Inc. (NASDAQ:SILK) was held by Matrix Capital Management, which reported holding $56.5 million worth of stock at the end of September. It was followed by Perceptive Advisors with a $35 million position. Other investors bullish on the company included Sectoral Asset Management, Rhenman & Partners Asset Management, and Parkman Healthcare Partners. In terms of the portfolio weights assigned to each position Sectoral Asset Management allocated the biggest weight to Silk Road Medical, Inc. (NASDAQ:SILK), around 2.24% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, setting aside 2.14 percent of its 13F equity portfolio to SILK.
Since Silk Road Medical, Inc. (NASDAQ:SILK) has faced a decline in interest from the smart money, it's easy to see that there lies a certain "tier" of funds that decided to sell off their positions entirely heading into Q4. It's worth mentioning that James E. Flynn's Deerfield Management said goodbye to the biggest investment of the "upper crust" of funds watched by Insider Monkey, totaling close to $31.2 million in stock. Anand Parekh's fund, Alyeska Investment Group, also said goodbye to its stock, about $7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Silk Road Medical, Inc. (NASDAQ:SILK) but similarly valued. These stocks are National Storage Affiliates Trust (NYSE:NSA), IGM Biosciences, Inc. (NASDAQ:IGMS), Coca-Cola Consolidated Inc. (NASDAQ:COKE), Aimmune Therapeutics Inc (NASDAQ:AIMT), ExlService Holdings, Inc. (NASDAQ:EXLS), CVB Financial Corp. (NASDAQ:CVBF), and Vishay Intertechnology (NYSE:VSH). This group of stocks' market values are closest to SILK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NSA,19,123756,6 IGMS,16,691434,0 COKE,12,31381,-1 AIMT,32,440174,12 EXLS,18,57117,6 CVBF,13,34209,-1 VSH,27,333332,-1 Average,19.6,244486,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $157 million in SILK's case. Aimmune Therapeutics Inc (NASDAQ:AIMT) is the most popular stock in this table. On the other hand Coca-Cola Consolidated Inc. (NASDAQ:COKE) is the least popular one with only 12 bullish hedge fund positions. Silk Road Medical, Inc. (NASDAQ:SILK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SILK is 55. 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 positive signal but 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately SILK wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SILK were disappointed as the stock returned -16.7% since the end of September (through 12/14) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.