There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze ABIOMED, Inc. (NASDAQ:ABMD).
Is ABIOMED, Inc. (NASDAQ:ABMD) an attractive investment today? The best stock pickers are getting more optimistic. The number of bullish hedge fund bets improved by 9 recently. Our calculations also showed that ABMD isn’t among the 30 most popular stocks among hedge funds.
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 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 market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a glance at the latest hedge fund action encompassing ABIOMED, Inc. (NASDAQ:ABMD).
How have hedgies been trading ABIOMED, Inc. (NASDAQ:ABMD)?
At Q4’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 41% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in ABMD 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.
More specifically, Renaissance Technologies was the largest shareholder of ABIOMED, Inc. (NASDAQ:ABMD), with a stake worth $607.7 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $239.7 million. Palo Alto Investors, Columbus Circle Investors, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers have jumped into ABIOMED, Inc. (NASDAQ:ABMD) headfirst. Millennium Management, managed by Israel Englander, established the biggest position in ABIOMED, Inc. (NASDAQ:ABMD). Millennium Management had $22.8 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $10.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Jeffrey Talpins’s Element Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to ABIOMED, Inc. (NASDAQ:ABMD). We will take a look at Plains All American Pipeline, L.P. (NYSE:PAA), Ameriprise Financial, Inc. (NYSE:AMP), Ulta Beauty, Inc. (NASDAQ:ULTA), and Markel Corporation (NYSE:MKL). This group of stocks’ market values are similar to ABMD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAA | 8 | 48965 | -2 |
| AMP | 32 | 555326 | -1 |
| ULTA | 42 | 1040887 | 2 |
| MKL | 24 | 1101879 | 4 |
| Average | 26.5 | 686764 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $687 million. That figure was $1301 million in ABMD’s case. Ulta Beauty, Inc. (NASDAQ:ULTA) is the most popular stock in this table. On the other hand Plains All American Pipeline, L.P. (NYSE:PAA) is the least popular one with only 8 bullish hedge fund positions. ABIOMED, Inc. (NASDAQ:ABMD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately ABMD wasn’t in this group. Hedge funds that bet on ABMD were disappointed as the stock returned 2.5% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
