Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 8 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Wright Medical Group N.V. (NASDAQ:WMGI).
Wright Medical Group N.V. (NASDAQ:WMGI) has seen an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that WMGI isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a glance at the latest hedge fund action encompassing Wright Medical Group N.V. (NASDAQ:WMGI).
What does the smart money think about Wright Medical Group N.V. (NASDAQ:WMGI)?
At the end of the first quarter, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the fourth quarter of 2018. On the other hand, there were a total of 23 hedge funds with a bullish position in WMGI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Samuel Isaly’s OrbiMed Advisors has the biggest position in Wright Medical Group N.V. (NASDAQ:WMGI), worth close to $131.7 million, corresponding to 2% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $102.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Jeremy Green’s Redmile Group, William Leland Edwards’s Palo Alto Investors and Ken Fisher’s Fisher Asset Management.
As aggregate interest increased, specific money managers have jumped into Wright Medical Group N.V. (NASDAQ:WMGI) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, created the largest position in Wright Medical Group N.V. (NASDAQ:WMGI). Healthcor Management LP had $37.3 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $30.1 million position during the quarter. The following funds were also among the new WMGI investors: Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Samuel Isaly’s OrbiMed Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Wright Medical Group N.V. (NASDAQ:WMGI) but similarly valued. These stocks are Amedisys Inc (NASDAQ:AMED), IBERIABANK Corporation (NASDAQ:IBKC), Agios Pharmaceuticals Inc (NASDAQ:AGIO), and Teladoc Health, Inc. (NYSE:TDOC). This group of stocks’ market values resemble WMGI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMED | 26 | 295842 | -6 |
| IBKC | 26 | 194750 | 2 |
| AGIO | 22 | 316343 | 5 |
| TDOC | 17 | 166690 | -2 |
| Average | 22.75 | 243406 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $243 million. That figure was $890 million in WMGI’s case. Amedisys Inc (NASDAQ:AMED) is the most popular stock in this table. On the other hand Teladoc Health, Inc. (NYSE:TDOC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Wright Medical Group N.V. (NASDAQ:WMGI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately WMGI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WMGI were disappointed as the stock returned -1.9% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
