Where Do Hedge Funds Stand On Masimo Corporation (MASI)?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Masimo Corporation (NASDAQ:MASI).

Masimo Corporation (NASDAQ:MASI) was in 35 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MASI has experienced an increase in support from the world’s most elite money managers recently. There were 29 hedge funds in our database with MASI positions at the end of the fourth quarter. Our calculations also showed that MASI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most stock holders, hedge funds are assumed to be underperforming, outdated financial vehicles of years past. While there are over 8000 funds trading at the moment, Our researchers hone in on the crème de la crème of this group, about 850 funds. These hedge fund managers control bulk of the hedge fund industry’s total asset base, and by monitoring their unrivaled stock picks, Insider Monkey has come up with many investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped 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 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Mario Gabelli of GAMCO Investors

At Insider Monkey, we scour multiple sources to uncover 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 battery 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. Keeping this in mind we’re going to analyze the recent hedge fund action encompassing Masimo Corporation (NASDAQ:MASI).

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

At the end of the first quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in MASI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Among these funds, Fundsmith LLP held the most valuable stake in Masimo Corporation (NASDAQ:MASI), which was worth $99 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $26.7 million worth of shares. Blue Whale Capital, Montanaro Asset Management, and GAMCO Investors 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 Montanaro Asset Management allocated the biggest weight to Masimo Corporation (NASDAQ:MASI), around 3.53% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, dishing out 3.31 percent of its 13F equity portfolio to MASI.

As one would reasonably expect, key money managers have jumped into Masimo Corporation (NASDAQ:MASI) headfirst. Moore Global Investments, managed by Louis Bacon, assembled the largest position in Masimo Corporation (NASDAQ:MASI). Moore Global Investments had $19.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $13.2 million investment in the stock during the quarter. The other funds with brand new MASI positions are John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw, and Israel Englander’s Millennium Management.

Let’s now take a look at hedge fund activity in other stocks similar to Masimo Corporation (NASDAQ:MASI). These stocks are Teva Pharmaceutical Industries Limited (NYSE:TEVA), InterContinental Hotels Group PLC (NYSE:IHG), XPO Logistics Inc (NYSE:XPO), Snap-on Incorporated (NYSE:SNA), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), CenterPoint Energy, Inc. (NYSE:CNP), and Shaw Communications Inc (NYSE:SJR). This group of stocks’ market caps are similar to MASI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $767 million. That figure was $309 million in MASI’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 8 bullish hedge fund positions. Masimo Corporation (NASDAQ:MASI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MASI is 82.2. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately MASI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MASI were disappointed as the stock returned 6.3% since the end of March (through 6/25) 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 many of these stocks already outperformed the market since 2019.

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