The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards LivaNova PLC (NASDAQ:LIVN), and what that likely means for the prospects of the company and its stock.
Is LivaNova PLC (NASDAQ:LIVN) a good stock to buy now? The best stock pickers are betting on the stock. The number of long hedge fund positions went up by 9 in recent months. Our calculations also showed that LIVN isn’t among the 30 most popular stocks among hedge funds. LIVN was in 30 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with LIVN positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the new hedge fund action regarding LivaNova PLC (NASDAQ:LIVN).
Hedge fund activity in LivaNova PLC (NASDAQ:LIVN)
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 43% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LIVN over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Healthcor Management LP was the largest shareholder of LivaNova PLC (NASDAQ:LIVN), with a stake worth $86.2 million reported as of the end of September. Trailing Healthcor Management LP was Redmile Group, which amassed a stake valued at $74.3 million. Point72 Asset Management, Marshall Wace LLP, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers have jumped into LivaNova PLC (NASDAQ:LIVN) headfirst. Atika Capital, managed by Brad Farber, established the largest call position in LivaNova PLC (NASDAQ:LIVN). Atika Capital had $14.6 million invested in the company at the end of the quarter. Joseph Edelman’s Perceptive Advisors also initiated a $13.8 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, James E. Flynn’s Deerfield Management, and Andreas Halvorsen’s Viking Global.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LivaNova PLC (NASDAQ:LIVN) but similarly valued. We will take a look at Owens Corning (NYSE:OC), Western Alliance Bancorporation (NYSE:WAL), Teladoc Health, Inc. (NYSE:TDOC), and People’s United Financial, Inc. (NASDAQ:PBCT). This group of stocks’ market valuations resemble LIVN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OC | 32 | 1044027 | 0 |
| WAL | 23 | 370751 | 0 |
| TDOC | 19 | 358433 | 0 |
| PBCT | 20 | 121306 | 7 |
| Average | 23.5 | 473629 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $533 million in LIVN’s case. Owens Corning (NYSE:OC) is the most popular stock in this table. On the other hand Teladoc Health, Inc. (NYSE:TDOC) is the least popular one with only 19 bullish hedge fund positions. LivaNova PLC (NASDAQ:LIVN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
