Hedge Funds Are Crazy About Masimo Corporation (MASI)

Masimo Corporation (NASDAQ:MASI) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently.

If you’d ask most traders, hedge funds are assumed to be worthless, old investment tools of years past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey hone in on the upper echelon of this club, around 450 funds. It is estimated that this group oversees the lion’s share of the hedge fund industry’s total capital, and by watching their best equity investments, we have deciphered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as integral, optimistic insider trading sentiment is another way to break down the marketplace. As the old adage goes: there are a variety of reasons for an insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).

Now, let’s take a gander at the recent action surrounding Masimo Corporation (NASDAQ:MASI).

What have hedge funds been doing with Masimo Corporation (NASDAQ:MASI)?

At Q1’s end, a total of 17 of the hedge funds we track held long positions in this stock, a change of 55% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly.

According to our comprehensive database, Stephen DuBois’s Camber Capital Management had the most valuable position in Masimo Corporation (NASDAQ:MASI), worth close to $24.5 million, accounting for 2% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which held a $11.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, Kevin Kotler’s Broadfin Capital and Jacob Gottlieb’s Visium Asset Management.

As aggregate interest increased, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Masimo Corporation (NASDAQ:MASI). Citadel Investment Group had 1.8 million invested in the company at the end of the quarter. James E. Flynn’s Deerfield Management also initiated a $1.4 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Dmitry Balyasny’s Balyasny Asset Management, and Steven Cohen’s SAC Capital Advisors.

What have insiders been doing with Masimo Corporation (NASDAQ:MASI)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last half-year time period, Masimo Corporation (NASDAQ:MASI) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Masimo Corporation (NASDAQ:MASI). These stocks are Wright Medical Group Inc (NASDAQ:WMGI), CONMED Corporation (NASDAQ:CNMD), ArthroCare Corporation (NASDAQ:ARTC), Cyberonics, Inc. (NASDAQ:CYBX), and Volcano Corporation (NASDAQ:VOLC). This group of stocks belong to the medical appliances & equipment industry and their market caps resemble MASI’s market cap.

With the results demonstrated by the aforementioned studies, retail investors must always pay attention to hedge fund and insider trading activity, and Masimo Corporation (NASDAQ:MASI) is no exception.

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