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 fourth 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 6 years and analyze what the smart money thinks of Pulmonx Corporation (NASDAQ:LUNG) based on that data.
Is LUNG a good stock to buy? The best stock pickers were getting more bullish. The number of long hedge fund positions inched up by 5 lately. Pulmonx Corporation (NASDAQ:LUNG) was in 27 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LUNG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 22 hedge funds in our database with LUNG positions at the end of the fourth quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 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.
James E. Flynn of Deerfield Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. 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. With all of this in mind we’re going to analyze the key hedge fund action encompassing Pulmonx Corporation (NASDAQ:LUNG).
Do Hedge Funds Think LUNG Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LUNG over the last 23 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, James E. Flynn’s Deerfield Management has the number one position in Pulmonx Corporation (NASDAQ:LUNG), worth close to $42.9 million, amounting to 0.9% of its total 13F portfolio. The second largest stake is held by Kevin Molloy of Iron Triangle Partners, with a $27.4 million position; 3.5% of its 13F portfolio is allocated to the company. Some other peers with similar optimism consist of Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Efrem Kamen’s Pura Vida Investments and Pasco Alfaro and Richard Turnure’s Miura Global Management. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Pulmonx Corporation (NASDAQ:LUNG), around 3.49% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, dishing out 3.31 percent of its 13F equity portfolio to LUNG.
With a general bullishness amongst the heavyweights, key money managers have jumped into Pulmonx Corporation (NASDAQ:LUNG) headfirst. Iron Triangle Partners, managed by Kevin Molloy, created the biggest position in Pulmonx Corporation (NASDAQ:LUNG). Iron Triangle Partners had $27.4 million invested in the company at the end of the quarter. Pasco Alfaro and Richard Turnure’s Miura Global Management also made a $18.5 million investment in the stock during the quarter. The following funds were also among the new LUNG investors: Israel Englander’s Millennium Management, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Jeffrey Diehl’s Adams Street Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pulmonx Corporation (NASDAQ:LUNG) but similarly valued. We will take a look at Kite Realty Group Trust (NYSE:KRG), SiriusPoint Ltd. (NYSE:SPNT), Gray Television, Inc. (NYSE:GTN), Lithium Americas Corp. (NYSE:LAC), ImmunoGen, Inc. (NASDAQ:IMGN), BrightSphere Investment Group Inc (NYSE:BSIG), and New Frontier Health Corporation (NYSE:NFH). All of these stocks’ market caps are similar to LUNG’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KRG,11,46978,7 SPNT,14,39043,3 GTN,25,152173,-2 LAC,10,49166,-2 IMGN,26,457651,1 BSIG,26,642021,0 NFH,13,310954,1 Average,17.9,242569,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $243 million. That figure was $247 million in LUNG’s case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand Lithium Americas Corp. (NYSE:LAC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Pulmonx Corporation (NASDAQ:LUNG) is more popular among hedge funds. Our overall hedge fund sentiment score for LUNG is 90. 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% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately LUNG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LUNG were disappointed as the stock returned -10.4% since the end of the first quarter (through 7/9) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.