Is Tandem Diabetes Care Inc (TNDM) A Good Stock To Buy?

We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Tandem Diabetes Care Inc (NASDAQ:TNDM) based on that data.

Is TNDM a good stock to buy? The best stock pickers were selling. The number of bullish hedge fund bets dropped by 1 in recent months. Tandem Diabetes Care Inc (NASDAQ:TNDM) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. Our calculations also showed that TNDM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 32 hedge funds in our database with TNDM holdings at the end of June.

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 let’s take a look at the fresh hedge fund action surrounding Tandem Diabetes Care Inc (NASDAQ:TNDM).

Noam Gottesman of GLG Partners

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

At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TNDM over the last 25 quarters. 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, Consonance Capital Management was the largest shareholder of Tandem Diabetes Care Inc (NASDAQ:TNDM), with a stake worth $58.2 million reported as of the end of September. Trailing Consonance Capital Management was Point72 Asset Management, which amassed a stake valued at $42.6 million. GLG Partners, Renaissance Technologies, and Citadel Investment Group 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 Consonance Capital Management allocated the biggest weight to Tandem Diabetes Care Inc (NASDAQ:TNDM), around 31.84% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, designating 1.61 percent of its 13F equity portfolio to TNDM.

Since Tandem Diabetes Care Inc (NASDAQ:TNDM) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedgies that elected to cut their full holdings last quarter. Interestingly, Chuck Royce’s Royce & Associates sold off the largest investment of all the hedgies watched by Insider Monkey, comprising an estimated $7.6 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dumped about $3.7 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Tandem Diabetes Care Inc (NASDAQ:TNDM). These stocks are Endeavor Group Holdings, Inc. (NYSE:EDR), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), Autoliv Inc. (NYSE:ALV), YETI Holdings, Inc. (NYSE:YETI), BRP Inc. (NASDAQ:DOOO), People’s United Financial, Inc. (NASDAQ:PBCT), and Encompass Health Corporation (NYSE:EHC). This group of stocks’ market caps are closest to TNDM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $875 million. That figure was $287 million in TNDM’s case. Encompass Health Corporation (NYSE:EHC) is the most popular stock in this table. On the other hand BRP Inc. (NASDAQ:DOOO) is the least popular one with only 16 bullish hedge fund positions. Tandem Diabetes Care Inc (NASDAQ:TNDM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TNDM is 54.6. 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 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on TNDM as the stock returned 7.7% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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