Did Hedge Funds Catch A Break With DENTSPLY SIRONA Inc. (XRAY)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought DENTSPLY SIRONA Inc. (NASDAQ:XRAY) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

DENTSPLY SIRONA Inc. (NASDAQ:XRAY) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 35 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that XRAY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare XRAY to other stocks including Korea Electric Power Corporation (NYSE:KEP), AMERCO (NASDAQ:UHAL), and Guardant Health, Inc. (NASDAQ:GH) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a look at the recent hedge fund action regarding DENTSPLY SIRONA Inc. (NASDAQ:XRAY).

David Siegel of Two Sigma Advisors

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

Heading into the fourth quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards XRAY over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Among these funds, Generation Investment Management held the most valuable stake in DENTSPLY SIRONA Inc. (NASDAQ:XRAY), which was worth $397.5 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $50.8 million worth of shares. Arrowstreet Capital, Select Equity Group, and Point72 Asset Management 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 Generation Investment Management allocated the biggest weight to DENTSPLY SIRONA Inc. (NASDAQ:XRAY), around 1.65% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, designating 1.18 percent of its 13F equity portfolio to XRAY.

Due to the fact that DENTSPLY SIRONA Inc. (NASDAQ:XRAY) has faced a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of hedgies that decided to sell off their entire stakes in the third quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group dumped the largest investment of all the hedgies watched by Insider Monkey, worth about $45.9 million in stock. Robert Pohly’s fund, Samlyn Capital, also cut its stock, about $22.5 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as DENTSPLY SIRONA Inc. (NASDAQ:XRAY) but similarly valued. These stocks are Korea Electric Power Corporation (NYSE:KEP), AMERCO (NASDAQ:UHAL), Guardant Health, Inc. (NASDAQ:GH), Agnico Eagle Mines Limited (NYSE:AEM), Campbell Soup Company (NYSE:CPB), LPL Financial Holdings Inc (NASDAQ:LPLA), and Jones Lang LaSalle Inc (NYSE:JLL). All of these stocks’ market caps are closest to XRAY’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $1014 million. That figure was $746 million in XRAY’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 3 bullish hedge fund positions. DENTSPLY SIRONA Inc. (NASDAQ:XRAY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XRAY is 82.1. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, XRAY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on XRAY were disappointed as the stock returned -7.8% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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