Is ABMD Stock A Buy or Sell?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is ABIOMED, Inc. (NASDAQ:ABMD), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is ABMD stock a buy? ABIOMED, Inc. (NASDAQ:ABMD) was in 23 hedge funds’ portfolios at the end of December. The all time high for this statistic is 35. ABMD has experienced a decrease in enthusiasm from smart money of late. There were 25 hedge funds in our database with ABMD holdings at the end of September. Our calculations also showed that ABMD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Henrik Rhenman of Rhenman & Partners Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to check out the key hedge fund action regarding ABIOMED, Inc. (NASDAQ:ABMD).

Do Hedge Funds Think ABMD Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ABMD over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the largest position in ABIOMED, Inc. (NASDAQ:ABMD). Renaissance Technologies has a $646.4 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is Palo Alto Investors, which holds a $180.5 million position; the fund has 9.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Cliff Asness’s AQR Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Henrik Rhenman’s Rhenman & Partners Asset Management. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to ABIOMED, Inc. (NASDAQ:ABMD), around 9.46% of its 13F portfolio. Rhenman & Partners Asset Management is also relatively very bullish on the stock, earmarking 1.67 percent of its 13F equity portfolio to ABMD.

Because ABIOMED, Inc. (NASDAQ:ABMD) has faced falling interest from the smart money, it’s safe to say that there were a few fund managers that decided to sell off their positions entirely by the end of the fourth quarter. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $1.4 million in stock. Donald Sussman’s fund, Paloma Partners, also dumped its stock, about $1.1 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the fourth quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ABIOMED, Inc. (NASDAQ:ABMD) but similarly valued. These stocks are Campbell Soup Company (NYSE:CPB), Arch Capital Group Ltd. (NASDAQ:ACGL), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Genuine Parts Company (NYSE:GPC), Mid America Apartment Communities Inc (NYSE:MAA), Elanco Animal Health Incorporated (NYSE:ELAN), and Teledyne Technologies Incorporated (NYSE:TDY). This group of stocks’ market values match ABMD’s market value.

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As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $608 million. That figure was $999 million in ABMD’s case. Elanco Animal Health Incorporated (NYSE:ELAN) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 14 bullish hedge fund positions. ABIOMED, Inc. (NASDAQ:ABMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ABMD is 38.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately ABMD wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); ABMD investors were disappointed as the stock returned 1.6% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.