The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Inari Medical, Inc. (NASDAQ:NARI) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is NARI a good stock to buy? Prominent investors were taking a bullish view. The number of bullish hedge fund bets advanced by 4 recently. Inari Medical, Inc. (NASDAQ:NARI) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NARI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 18 hedge funds in our database with NARI positions at the end of the fourth quarter.
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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Jeffrey Talpins of Element Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Now let’s take a look at the fresh hedge fund action regarding Inari Medical, Inc. (NASDAQ:NARI).
Do Hedge Funds Think NARI Is A Good Stock To Buy Now?
At the end of March, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in NARI 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.
The largest stake in Inari Medical, Inc. (NASDAQ:NARI) was held by Darsana Capital Partners, which reported holding $111.2 million worth of stock at the end of December. It was followed by Millennium Management with a $80.5 million position. Other investors bullish on the company included Perceptive Advisors, Citadel Investment Group, and CaaS Capital. In terms of the portfolio weights assigned to each position Darsana Capital Partners allocated the biggest weight to Inari Medical, Inc. (NASDAQ:NARI), around 3.11% of its 13F portfolio. Element Capital Management is also relatively very bullish on the stock, earmarking 2.05 percent of its 13F equity portfolio to NARI.
With a general bullishness amongst the heavyweights, key money managers have jumped into Inari Medical, Inc. (NASDAQ:NARI) headfirst. Darsana Capital Partners, managed by Anand Desai, initiated the most outsized position in Inari Medical, Inc. (NASDAQ:NARI). Darsana Capital Partners had $111.2 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also initiated a $25.8 million position during the quarter. The other funds with new positions in the stock are Jeffrey Diehl’s Adams Street Partners, Jeffrey Talpins’s Element Capital Management, and Guy Levy’s Soleus Capital.
Let’s now review hedge fund activity in other stocks similar to Inari Medical, Inc. (NASDAQ:NARI). We will take a look at Vroom, Inc. (NASDAQ:VRM), Stitch Fix, Inc. (NASDAQ:SFIX), Varonis Systems Inc (NASDAQ:VRNS), Travel + Leisure Co. (NYSE:TNL), Shell Midstream Partners LP (NYSE:SHLX), Daqo New Energy Corp (NYSE:DQ), and The Howard Hughes Corporation (NYSE:HHC). This group of stocks’ market caps are similar to NARI’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VRM,21,345351,-4 SFIX,28,465915,-4 VRNS,32,381944,2 TNL,30,745794,1 SHLX,4,27451,-3 DQ,17,129832,-1 HHC,27,1619423,0 Average,22.7,530816,-1.3 [/table]
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 $531 million. That figure was $396 million in NARI’s case. Varonis Systems Inc (NASDAQ:VRNS) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 4 bullish hedge fund positions. Inari Medical, Inc. (NASDAQ:NARI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NARI is 71.1. 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 negative signal and 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately NARI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NARI investors were disappointed as the stock returned -20.3% since the end of March (through 7/16) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.