We can judge whether Danaher Corporation (NYSE:DHR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.
Danaher Corporation (NYSE:DHR) has experienced an increase in enthusiasm from smart money lately. DHR was in 51 hedge funds’ portfolios at the end of the third quarter of 2018. There were 45 hedge funds in our database with DHR positions at the end of the previous quarter. Our calculations also showed that DHR isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a gander at the latest hedge fund action surrounding Danaher Corporation (NYSE:DHR).
Hedge fund activity in Danaher Corporation (NYSE:DHR)
At the end of the third quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 44 hedge funds with a bullish position in DHR at the beginning of this year. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Third Point, managed by Dan Loeb, holds the number one position in Danaher Corporation (NYSE:DHR). Third Point has a $353.1 million position in the stock, comprising 2.5% of its 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $349.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise D. E. Shaw’s D E Shaw, Ian Simm’s Impax Asset Management and Charles Akre’s Akre Capital Management.
Now, key money managers have jumped into Danaher Corporation (NYSE:DHR) headfirst. Eminence Capital, managed by Ricky Sandler, assembled the most outsized position in Danaher Corporation (NYSE:DHR). Eminence Capital had $115.9 million invested in the company at the end of the quarter. Per Johanssoná’s Bodenholm Capital also initiated a $40.7 million position during the quarter. The other funds with brand new DHR positions are Sander Gerber’s Hudson Bay Capital Management, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, and Kamran Moghtaderi’s Eversept Partners.
Let’s also examine hedge fund activity in other stocks similar to Danaher Corporation (NYSE:DHR). These stocks are BlackRock, Inc. (NYSE:BLK), Charter Communications, Inc. (NASDAQ:CHTR), EOG Resources Inc (NYSE:EOG), and The Bank of Nova Scotia (NYSE:BNS). This group of stocks’ market caps are closest to DHR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BLK | 40 | 856573 | 9 |
| CHTR | 67 | 8621116 | 11 |
| EOG | 37 | 952482 | 7 |
| BNS | 11 | 875002 | -3 |
| Average | 38.75 | 2826293 | 6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.75 hedge funds with bullish positions and the average amount invested in these stocks was $2.83 billion. That figure was $2.63 billion in DHR’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 11 bullish hedge fund positions. Danaher Corporation (NYSE:DHR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CHTR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
