Is INMD Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was INMODE LTD. (NASDAQ:INMD).

Is INMD stock a buy? INMODE LTD. (NASDAQ:INMD) has seen an increase in activity from the world’s largest hedge funds in recent months. INMODE LTD. (NASDAQ:INMD) was in 23 hedge funds’ portfolios at the end of December. The all time high for this statistic is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 16 hedge funds in our database with INMD positions at the end of the third quarter. Our calculations also showed that INMD 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.

Justin John Ferayorni of Tamarack Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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. With all of this in mind let’s take a look at the fresh hedge fund action regarding INMODE LTD. (NASDAQ:INMD).

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

At the end of December, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from the third quarter of 2020. On the other hand, there were a total of 7 hedge funds with a bullish position in INMD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in INMODE LTD. (NASDAQ:INMD) was held by Miura Global Management, which reported holding $32 million worth of stock at the end of December. It was followed by Noked Capital with a $22.1 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Noked Capital allocated the biggest weight to INMODE LTD. (NASDAQ:INMD), around 9.1% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, designating 6.05 percent of its 13F equity portfolio to INMD.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, established the most valuable position in INMODE LTD. (NASDAQ:INMD). Point72 Asset Management had $11.4 million invested in the company at the end of the quarter. Justin John Ferayorni’s Tamarack Capital Management also initiated a $4.1 million position during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Noam Gottesman’s GLG Partners, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as INMODE LTD. (NASDAQ:INMD) but similarly valued. These stocks are Steelcase Inc. (NYSE:SCS), EnPro Industries, Inc. (NYSE:NPO), Virtusa Corporation (NASDAQ:VRTU), Glu Mobile Inc. (NASDAQ:GLUU), U.S. Physical Therapy, Inc. (NYSE:USPH), The ODP Corporation (NASDAQ:ODP), and BrightSphere Investment Group Inc (NYSE:BSIG). All of these stocks’ market caps are closest to INMD’s market cap.

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As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $248 million. That figure was $148 million in INMD’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand U.S. Physical Therapy, Inc. (NYSE:USPH) is the least popular one with only 12 bullish hedge fund positions. INMODE LTD. (NASDAQ:INMD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INMD is 70.6. 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. 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 still beat the market by 0.9 percentage points. Hedge funds were also right about betting on INMD as the stock returned 81.2% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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