Here is What Hedge Funds Think About ResMed Inc. (RMD)

·6 min read

In this article we will check out the progression of hedge fund sentiment towards ResMed Inc. (NYSE:RMD) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is ResMed Inc. (NYSE:RMD) going to take off soon? The smart money was becoming hopeful. The number of bullish hedge fund positions improved by 1 in recent months. ResMed Inc. (NYSE:RMD) was in 26 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that RMD isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 25 hedge funds in our database with RMD positions at the end of the first quarter.

At the moment there are several indicators stock traders employ to evaluate publicly traded companies. A duo of the most under-the-radar indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best fund managers can outpace the market by a superb margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Steven Cohen of Point72 Asset Management

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 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. 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 take a look at the latest hedge fund action encompassing ResMed Inc. (NYSE:RMD).

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

At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in RMD a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness's AQR Capital Management has the number one position in ResMed Inc. (NYSE:RMD), worth close to $75.7 million, corresponding to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Anand Parekh of Alyeska Investment Group, with a $57.7 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Ken Griffin's Citadel Investment Group, Israel Englander's Millennium Management and Ray Dalio's Bridgewater Associates. In terms of the portfolio weights assigned to each position Motley Fool Asset Management allocated the biggest weight to ResMed Inc. (NYSE:RMD), around 1.4% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, dishing out 1.3 percent of its 13F equity portfolio to RMD.

As one would reasonably expect, key money managers have been driving this bullishness. Alyeska Investment Group, managed by Anand Parekh, established the most valuable position in ResMed Inc. (NYSE:RMD). Alyeska Investment Group had $57.7 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $20.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Hulsizer's PEAK6 Capital Management, Andrew Weiss's Weiss Asset Management, and Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as ResMed Inc. (NYSE:RMD) but similarly valued. We will take a look at XPeng Inc. (NYSE:XPEV), Cummins Inc. (NYSE:CMI), Xilinx, Inc. (NASDAQ:XLNX), TransDigm Group Incorporated (NYSE:TDG), Xcel Energy Inc (NASDAQ:XEL), Brown-Forman Corporation (NYSE:BF), and Alcon Inc. (NYSE:ALC). This group of stocks' market values resemble RMD's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XPEV,19,784609,0 CMI,45,1102223,8 XLNX,59,4162249,2 TDG,57,7351832,-5 XEL,22,235410,4 BF,31,1667783,-4 ALC,22,727825,-1 Average,36.4,2290276,0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.4 hedge funds with bullish positions and the average amount invested in these stocks was $2290 million. That figure was $428 million in RMD's case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand XPeng Inc. (NYSE:XPEV) is the least popular one with only 19 bullish hedge fund positions. ResMed Inc. (NYSE:RMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RMD is 37. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on RMD as the stock returned 3.8% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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

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