Is MASI 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 Masimo Corporation (NASDAQ:MASI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is MASI stock a buy? Hedge funds were in an optimistic mood. The number of long hedge fund bets went up by 2 in recent months. Masimo Corporation (NASDAQ:MASI) was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 34. Our calculations also showed that MASI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Peter Rathjens of Arrowstreet Capital

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. Keeping this in mind let’s check out the key hedge fund action encompassing Masimo Corporation (NASDAQ:MASI).

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

At the end of the fourth quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MASI over the last 22 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Fundsmith LLP held the most valuable stake in Masimo Corporation (NASDAQ:MASI), which was worth $115.2 million at the end of the fourth quarter. On the second spot was Blue Whale Capital which amassed $27.3 million worth of shares. GAMCO Investors, Montanaro Asset Management, and Arrowstreet Capital 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 Blue Whale Capital allocated the biggest weight to Masimo Corporation (NASDAQ:MASI), around 3.89% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, setting aside 3.44 percent of its 13F equity portfolio to MASI.

Consequently, key money managers have jumped into Masimo Corporation (NASDAQ:MASI) headfirst. Montanaro Asset Management, managed by Charles Montanaro, created the biggest position in Masimo Corporation (NASDAQ:MASI). Montanaro Asset Management had $20.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $16.3 million investment in the stock during the quarter. The following funds were also among the new MASI investors: Ken Griffin’s Citadel Investment Group, Phil Frohlich’s Prescott Group Capital Management, and Qing Li’s Sciencast Management.

Let’s also examine hedge fund activity in other stocks similar to Masimo Corporation (NASDAQ:MASI). These stocks are Oak Street Health, Inc. (NYSE:OSH), Boston Properties, Inc. (NYSE:BXP), ABIOMED, Inc. (NASDAQ:ABMD), Campbell Soup Company (NYSE:CPB), Arch Capital Group Ltd. (NASDAQ:ACGL), Brookfield Infrastructure Partners L.P. (NYSE:BIP), and Genuine Parts Company (NYSE:GPC). This group of stocks’ market valuations are similar to MASI’s market valuation.

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As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $563 million. That figure was $272 million in MASI’s case. Oak Street Health, Inc. (NYSE:OSH) 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. Masimo Corporation (NASDAQ:MASI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MASI is 70.1. 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 positive signal but 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 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately MASI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on MASI were disappointed as the stock returned -12.5% since the end of December (through 4/12) 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 many of these stocks already outperformed the market since 2019.

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