Should You Avoid Insulet Corporation (PODD)?

To many of your peers, hedge funds are assumed to be delayed, outdated financial tools of a period lost to current times. Although there are more than 8,000 hedge funds in operation in present day, Insider Monkey aim at the leaders of this group, close to 525 funds. Analysts calculate that this group controls most of the hedge fund industry’s total capital, and by paying attention to their best picks, we’ve figured out a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as necessary, bullish insider trading sentiment is another way to look at the financial markets. There are a variety of reasons for a bullish insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).

Thus, let’s discuss the recent info for Insulet Corporation (NASDAQ:PODD).

What does the smart money think about Insulet Corporation (NASDAQ:PODD)?

In preparation for the third quarter, a total of 13 of the hedge funds we track were long in this stock, a change of -7% from the first quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially.

Out of the hedge funds we follow, Samuel Isaly’s OrbiMed Advisors had the biggest position in Insulet Corporation (NASDAQ:PODD), worth close to $95.8 million, comprising 2% of its total 13F portfolio. Coming in second is Mariko Gordon of Daruma Asset Management, with a $51.4 million position; 2.5% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Drew Cupps’s Cupps Capital Management, Jeremy Green’s Redmile Group and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Since Insulet Corporation (NASDAQ:PODD) has faced dropping sentiment from the top-tier hedge fund industry, it’s safe to say that there is a sect of hedgies that slashed their positions entirely heading into Q2. Interestingly, Kevin Kotler’s Broadfin Capital dropped the largest stake of all the hedgies we key on, worth an estimated $3.1 million in stock, and Israel Englander of Millennium Management was right behind this move, as the fund dumped about $1.5 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q2.

What have insiders been doing with Insulet Corporation (NASDAQ:PODD)?

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time frame, Insulet Corporation (NASDAQ:PODD) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Insulet Corporation (NASDAQ:PODD). These stocks are Hill-Rom Holdings, Inc. (NYSE:HRC), Endologix, Inc. (NASDAQ:ELGX), Integra Lifesciences Holdings Corp (NASDAQ:IART), DexCom, Inc. (NASDAQ:DXCM), and HeartWare International Inc (NASDAQ:HTWR). This group of stocks belong to the medical instruments & supplies industry and their market caps are similar to PODD’s market cap.

Using the returns shown by Insider Monkey’s studies, regular investors should always watch hedge fund and insider trading sentiment, and Insulet Corporation (NASDAQ:PODD) is no exception.

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