Is ShockWave Medical, Inc. (SWAV) A Good Stock To Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30th, so let’s proceed with the discussion of the hedge fund sentiment on ShockWave Medical, Inc. (NASDAQ:SWAV).

Is SWAV a good stock to buy? ShockWave Medical, Inc. (NASDAQ:SWAV) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic is 27. SWAV investors should pay attention to a decrease in hedge fund sentiment in recent months. There were 27 hedge funds in our database with SWAV positions at the end of the second quarter. Our calculations also showed that SWAV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a glance at the fresh hedge fund action regarding ShockWave Medical, Inc. (NASDAQ:SWAV).

Brad Farber of Atika Capital

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

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SWAV over the last 25 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Among these funds, Rock Springs Capital Management held the most valuable stake in ShockWave Medical, Inc. (NASDAQ:SWAV), which was worth $45.3 million at the end of the third quarter. On the second spot was Driehaus Capital which amassed $36.7 million worth of shares. D E Shaw, Atika Capital, and Fisher Asset Management 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 Atika Capital allocated the biggest weight to ShockWave Medical, Inc. (NASDAQ:SWAV), around 1.5% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, setting aside 0.95 percent of its 13F equity portfolio to SWAV.

Judging by the fact that ShockWave Medical, Inc. (NASDAQ:SWAV) has witnessed bearish sentiment from the smart money, we can see that there exists a select few money managers that elected to cut their positions entirely last quarter. Interestingly, Paul Tudor Jones’s Tudor Investment Corp dumped the largest investment of the 750 funds followed by Insider Monkey, totaling close to $4.3 million in stock, and Jinghua Yan’s TwinBeech Capital was right behind this move, as the fund dumped about $3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to ShockWave Medical, Inc. (NASDAQ:SWAV). We will take a look at Wyndham Hotels & Resorts, Inc. (NYSE:WH), Gold Fields Limited (NYSE:GFI), Woodward Inc (NASDAQ:WWD), WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), Pure Storage, Inc. (NYSE:PSTG), Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), and Omega Healthcare Investors Inc (NYSE:OHI). This group of stocks’ market caps are closest to SWAV’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $639 million. That figure was $264 million in SWAV’s case. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the most popular stock in this table. On the other hand Gold Fields Limited (NYSE:GFI) is the least popular one with only 15 bullish hedge fund positions. ShockWave Medical, Inc. (NASDAQ:SWAV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SWAV is 43. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately SWAV wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SWAV investors were disappointed as the stock returned -11.7% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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