Were Expert Investors Right About Insulet Corporation (PODD)?

Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Insulet Corporation (NASDAQ:PODD) at the end of the third quarter and determine whether the smart money was really smart about this stock.

Is Insulet Corporation (NASDAQ:PODD) a buy, sell, or hold? Money managers were turning less bullish. The number of long hedge fund positions shrunk by 6 recently. Insulet Corporation (NASDAQ:PODD) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. 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 Q3 rankings). There were 38 hedge funds in our database with PODD holdings at the end of June.

Philippe Laffont of Coatue Management

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 check out the fresh hedge fund action encompassing Insulet Corporation (NASDAQ:PODD).

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

At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PODD over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Insulet Corporation (NASDAQ:PODD) was held by D1 Capital Partners, which reported holding $376.3 million worth of stock at the end of September. It was followed by Viking Global with a $288 million position. Other investors bullish on the company included Coatue Management, Rock Springs Capital Management, and Fisher Asset Management. In terms of the portfolio weights assigned to each position Think Investments allocated the biggest weight to Insulet Corporation (NASDAQ:PODD), around 5.46% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, dishing out 2.62 percent of its 13F equity portfolio to PODD.

Seeing as Insulet Corporation (NASDAQ:PODD) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Jeffrey Jay and David Kroin’s Great Point Partners dropped the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $28.7 million in stock. Roberto Mignone’s fund, Bridger Management, also dropped its stock, about $27.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Insulet Corporation (NASDAQ:PODD) but similarly valued. We will take a look at AMC Entertainment Holdings Inc (NYSE:AMC), DraftKings Inc. (NASDAQ:DKNG), FirstEnergy Corp. (NYSE:FE), Broadridge Financial Solutions, Inc. (NYSE:BR), SK Telecom Co., Ltd. (NYSE:SKM), Halliburton Company (NYSE:HAL), and M&T Bank Corporation (NYSE:MTB). This group of stocks’ market values match PODD’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $774 million. That figure was $1318 million in PODD’s case. FirstEnergy Corp. (NYSE:FE) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 6 bullish hedge fund positions. Insulet Corporation (NASDAQ:PODD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PODD is 61.4. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, PODD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PODD were disappointed as the stock returned -12.7% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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

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