Was The Smart Money Right About Insulet Corporation (PODD)?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Insulet Corporation (NASDAQ:PODD)? The smart money sentiment can provide an answer to this question.

Is Insulet Corporation (NASDAQ:PODD) a healthy stock for your portfolio? Money managers were in a bullish mood. The number of bullish hedge fund bets advanced by 3 recently. Insulet Corporation (NASDAQ:PODD) was in 41 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 44. Our calculations also showed that PODD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

According to most market participants, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, Our researchers choose to focus on the top tier of this group, around 850 funds. These hedge fund managers preside over bulk of the hedge fund industry’s total asset base, and by observing their first-class stock picks, Insider Monkey has unsheathed a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Andreas Halvorsen of Viking Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage. Now we’re going to check out the recent hedge fund action encompassing Insulet Corporation (NASDAQ:PODD).

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

At Q4’s end, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PODD over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Coatue Management held the most valuable stake in Insulet Corporation (NASDAQ:PODD), which was worth $448.4 million at the end of the fourth quarter. On the second spot was Viking Global which amassed $123.6 million worth of shares. Citadel Investment Group, Fisher Asset Management, and Rock Springs Capital 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 Think Investments allocated the biggest weight to Insulet Corporation (NASDAQ:PODD), around 7.1% of its 13F portfolio. Parian Global Management is also relatively very bullish on the stock, earmarking 2.53 percent of its 13F equity portfolio to PODD.

Consequently, key money managers were leading the bulls’ herd. Deerfield Management, managed by James E. Flynn, initiated the biggest position in Insulet Corporation (NASDAQ:PODD). Deerfield Management had $76.4 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $19.2 million investment in the stock during the quarter. The other funds with brand new PODD positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jeffrey Jay and David Kroin’s Great Point Partners, and Brad Farber’s Atika Capital.

Let’s also examine hedge fund activity in other stocks similar to Insulet Corporation (NASDAQ:PODD). We will take a look at Western Digital Corporation (NASDAQ:WDC), IAC/InterActiveCorp (NASDAQ:IAC), Royal Caribbean Group (NYSE:RCL), United Rentals, Inc. (NYSE:URI), Halliburton Company (NYSE:HAL), Trimble Inc. (NASDAQ:TRMB), and Zendesk Inc (NYSE:ZEN). This group of stocks’ market valuations are similar to PODD’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.4 hedge funds with bullish positions and the average amount invested in these stocks was $1337 million. That figure was $1418 million in PODD’s case. IAC/InterActiveCorp (NASDAQ:IAC) is the most popular stock in this table. On the other hand Trimble Inc. (NASDAQ:TRMB) is the least popular one with only 21 bullish hedge fund positions. Insulet Corporation (NASDAQ:PODD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PODD is 57.7. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on PODD as the stock returned 15.5% since the end of the fourth quarter (through 4/30) and outperformed the market by an even larger margin.

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