The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Inspire Medical Systems, Inc. (NYSE:INSP) based on those filings.
Inspire Medical Systems, Inc. (NYSE:INSP) was in 25 hedge funds’ portfolios at the end of March. INSP has experienced an increase in hedge fund interest in recent months. There were 21 hedge funds in our database with INSP positions at the end of the previous quarter. Our calculations also showed that INSP 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.
To most investors, hedge funds are seen as slow, outdated financial vehicles of the past. While there are over 8000 funds trading at present, Our researchers choose to focus on the crème de la crème of this club, about 850 funds. Most estimates calculate that this group of people administer the majority of the hedge fund industry’s total capital, and by shadowing their best picks, Insider Monkey has spotted various investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Kris Jenner of Rock Springs Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. With all of this in mind let’s take a look at the key hedge fund action regarding Inspire Medical Systems, Inc. (NYSE:INSP).
How are hedge funds trading Inspire Medical Systems, Inc. (NYSE:INSP)?
Heading into the second quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards INSP over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, 12 West Capital Management held the most valuable stake in Inspire Medical Systems, Inc. (NYSE:INSP), which was worth $48.1 million at the end of the third quarter. On the second spot was Columbus Circle Investors which amassed $37.2 million worth of shares. Miura Global Management, Driehaus Capital, and D E Shaw 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 Miura Global Management allocated the biggest weight to Inspire Medical Systems, Inc. (NYSE:INSP), around 8.27% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, dishing out 5.61 percent of its 13F equity portfolio to INSP.
As aggregate interest increased, specific money managers were breaking ground themselves. Miura Global Management, managed by Pasco Alfaro / Richard Tumure, initiated the most valuable position in Inspire Medical Systems, Inc. (NYSE:INSP). Miura Global Management had $31.9 million invested in the company at the end of the quarter. Ricky Sandler’s Eminence Capital also made a $22.4 million investment in the stock during the quarter. The following funds were also among the new INSP investors: Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Israel Englander’s Millennium Management, and John Osterweis’s Osterweis Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Inspire Medical Systems, Inc. (NYSE:INSP) but similarly valued. These stocks are AeroVironment, Inc. (NASDAQ:AVAV), Theravance Biopharma Inc (NASDAQ:TBPH), TransAlta Corporation (NYSE:TAC), and Akcea Therapeutics, Inc. (NASDAQ:AKCA). This group of stocks’ market valuations resemble INSP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVAV | 10 | 51290 | -3 |
| TBPH | 14 | 335681 | 1 |
| TAC | 15 | 55063 | 5 |
| AKCA | 11 | 11776 | 1 |
| Average | 12.5 | 113453 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $335 million in INSP’s case. TransAlta Corporation (NYSE:TAC) is the most popular stock in this table. On the other hand AeroVironment, Inc. (NASDAQ:AVAV) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Inspire Medical Systems, Inc. (NYSE:INSP) 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 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on INSP as the stock returned 41.8% so far in Q2 (through June 10th) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
