Hedge Funds Are Coming Back To Tandem Diabetes Care Inc (TNDM)

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 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards Tandem Diabetes Care Inc (NASDAQ:TNDM).

Tandem Diabetes Care Inc (NASDAQ:TNDM) has seen an increase in support from the world’s most elite money managers lately. Tandem Diabetes Care Inc (NASDAQ:TNDM) was in 32 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that TNDM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Gavin Saitowitz of Prelude Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Now we’re going to go over the fresh hedge fund action regarding Tandem Diabetes Care Inc (NASDAQ:TNDM).

Do Hedge Funds Think TNDM Is A Good Stock To Buy Now?

At second quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 28% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TNDM over the last 24 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

The largest stake in Tandem Diabetes Care Inc (NASDAQ:TNDM) was held by Consonance Capital Management, which reported holding $95.4 million worth of stock at the end of June. It was followed by Point72 Asset Management with a $66.1 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and GLG Partners. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Tandem Diabetes Care Inc (NASDAQ:TNDM), around 11.48% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 1.15 percent of its 13F equity portfolio to TNDM.

Now, key hedge funds have jumped into Tandem Diabetes Care Inc (NASDAQ:TNDM) headfirst. Consonance Capital Management, managed by Mitchell Blutt, created the biggest position in Tandem Diabetes Care Inc (NASDAQ:TNDM). Consonance Capital Management had $95.4 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $6.1 million investment in the stock during the quarter. The following funds were also among the new TNDM investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Blair Baker’s Precept Capital Management.

Let’s go over hedge fund activity in other stocks similar to Tandem Diabetes Care Inc (NASDAQ:TNDM). These stocks are Landstar System, Inc. (NASDAQ:LSTR), Ingredion Incorporated (NYSE:INGR), CDK Global Inc (NASDAQ:CDK), Popular Inc (NASDAQ:BPOP), Primerica, Inc. (NYSE:PRI), BOK Financial Corporation (NASDAQ:BOKF), and Hayward Holdings, Inc. (NYSE:HAYW). This group of stocks’ market valuations are closest to TNDM’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. That figure was $353 million in TNDM’s case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 13 bullish hedge fund positions. Tandem Diabetes Care Inc (NASDAQ:TNDM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TNDM is 82.1. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on TNDM as the stock returned 28.7% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.