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 first 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 4.5 years and analyze what the smart money thinks of DexCom, Inc. (NASDAQ:DXCM) based on that data.
DexCom, Inc. (NASDAQ:DXCM) has experienced an increase in hedge fund sentiment recently. DXCM was in 58 hedge funds’ portfolios at the end of the first quarter of 2020. There were 40 hedge funds in our database with DXCM positions at the end of the previous quarter. Our calculations also showed that DXCM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the fresh hedge fund action encompassing DexCom, Inc. (NASDAQ:DXCM).
What have hedge funds been doing with DexCom, Inc. (NASDAQ:DXCM)?
At Q1’s end, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 45% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in DXCM a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in DexCom, Inc. (NASDAQ:DXCM), which was worth $255.6 million at the end of the third quarter. On the second spot was D E Shaw which amassed $163.7 million worth of shares. GQG Partners, OrbiMed Advisors, and Citadel Investment Group were 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 Aubrey Capital Management allocated the biggest weight to DexCom, Inc. (NASDAQ:DXCM), around 5.72% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, designating 4.21 percent of its 13F equity portfolio to DXCM.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. GQG Partners, managed by Rajiv Jain, assembled the largest position in DexCom, Inc. (NASDAQ:DXCM). GQG Partners had $126 million invested in the company at the end of the quarter. Jeremy Green’s Redmile Group also initiated a $34.8 million position during the quarter. The other funds with brand new DXCM positions are James E. Flynn’s Deerfield Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Brian Ashford-Russell and Tim Woolley’s Polar Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as DexCom, Inc. (NASDAQ:DXCM) but similarly valued. We will take a look at China Telecom Corporation Limited (NYSE:CHA), Lululemon Athletica inc. (NASDAQ:LULU), MSCI Inc (NYSE:MSCI), and Manulife Financial Corporation (NYSE:MFC). This group of stocks’ market valuations are closest to DXCM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHA | 5 | 28440 | -2 |
| LULU | 40 | 788852 | -7 |
| MSCI | 29 | 638503 | -13 |
| MFC | 20 | 139150 | 1 |
| Average | 23.5 | 398736 | -5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $399 million. That figure was $1211 million in DXCM’s case. Lululemon Athletica inc. (NASDAQ:LULU) is the most popular stock in this table. On the other hand China Telecom Corporation Limited (NYSE:CHA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks DexCom, Inc. (NASDAQ:DXCM) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on DXCM as the stock returned 50.5% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
