While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding iRadimed Corporation (NASDAQ:IRMD).
Is iRadimed Corporation (NASDAQ:IRMD) a bargain? Money managers were taking a pessimistic view. The number of long hedge fund positions were trimmed by 2 in recent months. iRadimed Corporation (NASDAQ:IRMD) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 14. Our calculations also showed that IRMD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 5 hedge funds in our database with IRMD positions at the end of the fourth quarter.
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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
David Harding of Winton Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 let’s analyze the recent hedge fund action encompassing iRadimed Corporation (NASDAQ:IRMD).
Do Hedge Funds Think IRMD Is A Good Stock To Buy Now?
At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in IRMD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Nine Ten Partners held the most valuable stake in iRadimed Corporation (NASDAQ:IRMD), which was worth $19.6 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $18.6 million worth of shares. Soleus Capital was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nine Ten Partners allocated the biggest weight to iRadimed Corporation (NASDAQ:IRMD), around 2.72% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, earmarking 2.24 percent of its 13F equity portfolio to IRMD.
Judging by the fact that iRadimed Corporation (NASDAQ:IRMD) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there were a few money managers that elected to cut their entire stakes by the end of the first quarter. Intriguingly, David Harding’s Winton Capital Management dropped the biggest investment of all the hedgies followed by Insider Monkey, totaling close to $0.7 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as iRadimed Corporation (NASDAQ:IRMD) but similarly valued. These stocks are G. Willi-Food International Limited (NASDAQ:WILC), Cheetah Mobile Inc (NYSE:CMCM), Utah Medical Products, Inc. (NASDAQ:UTMD), Atento SA (NYSE:ATTO), Neuronetics, Inc. (NASDAQ:STIM), Ceragon Networks Ltd. (NASDAQ:CRNT), and Home Bancorp, Inc. (NASDAQ:HBCP). This group of stocks’ market caps resemble IRMD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WILC | 2 | 31828 | 0 |
| CMCM | 4 | 3156 | 0 |
| UTMD | 4 | 28627 | -2 |
| ATTO | 5 | 128141 | -1 |
| STIM | 19 | 123225 | 4 |
| CRNT | 8 | 25462 | 1 |
| HBCP | 2 | 6478 | -1 |
| Average | 6.3 | 49560 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $51 million in IRMD’s case. Neuronetics, Inc. (NASDAQ:STIM) is the most popular stock in this table. On the other hand G. Willi-Food International Limited (NASDAQ:WILC) is the least popular one with only 2 bullish hedge fund positions. iRadimed Corporation (NASDAQ:IRMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IRMD is 12.4. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on IRMD as the stock returned 11.7% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
