We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of CONMED Corporation (NASDAQ:CNMD) based on that data.
CONMED Corporation (NASDAQ:CNMD) has experienced an increase in hedge fund interest recently. CNMD was in 31 hedge funds’ portfolios at the end of December. There were 24 hedge funds in our database with CNMD positions at the end of the previous quarter. Our calculations also showed that CNMD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the fresh hedge fund action surrounding CONMED Corporation (NASDAQ:CNMD).
Hedge fund activity in CONMED Corporation (NASDAQ:CNMD)
At Q4’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in CNMD a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Arthur B Cohen and Joseph Healey’s Healthcor Management LP has the biggest position in CONMED Corporation (NASDAQ:CNMD), worth close to $59.9 million, corresponding to 2.1% of its total 13F portfolio. On Healthcor Management LP’s heels is Millennium Management, managed by Israel Englander, which holds a $46.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass Ken Fisher’s Fisher Asset Management, Principal Global Investors’s Columbus Circle Investors and Brian Ashford-Russell and Tim Woolley’s Polar Capital. In terms of the portfolio weights assigned to each position Healthcor Management LP allocated the biggest weight to CONMED Corporation (NASDAQ:CNMD), around 2.14% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, earmarking 1.25 percent of its 13F equity portfolio to CNMD.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Renaissance Technologies initiated the largest position in CONMED Corporation (NASDAQ:CNMD). Renaissance Technologies had $5.2 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $3.4 million position during the quarter. The other funds with brand new CNMD positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Robert B. Gillam’s McKinley Capital Management, and D. E. Shaw’s D E Shaw.
Let’s go over hedge fund activity in other stocks similar to CONMED Corporation (NASDAQ:CNMD). These stocks are Paramount Group Inc (NYSE:PGRE), EnerSys (NYSE:ENS), Gol Linhas Aereas Inteligentes SA (NYSE:GOL), and American National Insurance Company (NASDAQ:ANAT). This group of stocks’ market caps resemble CNMD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PGRE | 20 | 362031 | -2 |
| ENS | 13 | 71202 | -6 |
| GOL | 12 | 218734 | 1 |
| ANAT | 16 | 62011 | -1 |
| Average | 15.25 | 178495 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $271 million in CNMD’s case. Paramount Group Inc (NYSE:PGRE) is the most popular stock in this table. On the other hand Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks CONMED Corporation (NASDAQ:CNMD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately CNMD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CNMD were disappointed as the stock returned -48.9% during the first two and a half months of 2020 (through March 25th) 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 most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
