Before we spend many hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of ABIOMED, Inc. (NASDAQ:ABMD).
Is ABIOMED, Inc. (NASDAQ:ABMD) a splendid investment today? The smart money is reducing their bets on the stock. The number of long hedge fund bets dropped by 2 lately. Our calculations also showed that ABMD isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a look at the latest hedge fund action regarding ABIOMED, Inc. (NASDAQ:ABMD).
Hedge fund activity in ABIOMED, Inc. (NASDAQ:ABMD)
Heading into the fourth quarter of 2018, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ABMD over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of ABIOMED, Inc. (NASDAQ:ABMD), with a stake worth $773.1 million reported as of the end of September. Trailing Renaissance Technologies was Palo Alto Investors, which amassed a stake valued at $318.8 million. Two Sigma Advisors, AQR Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that ABIOMED, Inc. (NASDAQ:ABMD) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that slashed their entire stakes last quarter. Intriguingly, Israel Englander’s Millennium Management said goodbye to the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $80.2 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dumped its stock, about $5 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ABIOMED, Inc. (NASDAQ:ABMD) but similarly valued. These stocks are Freeport-McMoRan Inc. (NYSE:FCX), Global Payments Inc (NYSE:GPN), FleetCor Technologies, Inc. (NYSE:FLT), and Ctrip.com International, Ltd. (NASDAQ:CTRP). This group of stocks’ market valuations match ABMD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FCX | 47 | 2251355 | 5 |
| GPN | 26 | 443182 | 4 |
| FLT | 37 | 1371542 | 4 |
| CTRP | 19 | 1160299 | -12 |
| Average | 32.25 | 1306595 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $1.31 billion. That figure was $1.75 billion in ABMD’s case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand Ctrip.com International, Ltd. (NASDAQ:CTRP) is the least popular one with only 19 bullish hedge fund positions. ABIOMED, Inc. (NASDAQ:ABMD) 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. In this regard FCX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
