Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Viemed Healthcare, Inc. (NASDAQ:VMD) based on that data.
Viemed Healthcare, Inc. (NASDAQ:VMD) has experienced a decrease in enthusiasm from smart money in recent months. Our calculations also showed that VMD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Jeffrey Bronchick of Cove Street Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the fresh hedge fund action encompassing Viemed Healthcare, Inc. (NASDAQ:VMD).
Hedge fund activity in Viemed Healthcare, Inc. (NASDAQ:VMD)
Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in VMD a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Nantahala Capital Management was the largest shareholder of Viemed Healthcare, Inc. (NASDAQ:VMD), with a stake worth $7.1 million reported as of the end of September. Trailing Nantahala Capital Management was Cove Street Capital, which amassed a stake valued at $0.7 million. Royce & Associates, Millennium Management, and Two Sigma Advisors 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 Nantahala Capital Management allocated the biggest weight to Viemed Healthcare, Inc. (NASDAQ:VMD), around 0.27% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, setting aside 0.15 percent of its 13F equity portfolio to VMD.
Due to the fact that Viemed Healthcare, Inc. (NASDAQ:VMD) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of hedgies that elected to cut their full holdings by the end of the first quarter. Intriguingly, Richard Driehaus’s Driehaus Capital said goodbye to the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $0.2 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dropped its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks similar to Viemed Healthcare, Inc. (NASDAQ:VMD). We will take a look at VSE Corporation (NASDAQ:VSEC), Fluidigm Corporation (NASDAQ:FLDM), Galiano Gold Inc (NYSE:AKG), and Bioceres Crop Solutions Corp. (NYSE:BIOX). This group of stocks’ market values resemble VMD’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VSEC,4,1723,-1 FLDM,16,42366,-2 AKG,4,24151,-1 BIOX,3,343,0 Average,6.75,17146,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $9 million in VMD’s case. Fluidigm Corporation (NASDAQ:FLDM) is the most popular stock in this table. On the other hand Bioceres Crop Solutions Corp. (NYSE:BIOX) is the least popular one with only 3 bullish hedge fund positions. Viemed Healthcare, Inc. (NASDAQ:VMD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on VMD as the stock returned 99.2% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.