Did Hedge Funds Catch A Break With Henry Schein, Inc. (HSIC)?

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 Henry Schein, Inc. (NASDAQ:HSIC) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Is Henry Schein, Inc. (NASDAQ:HSIC) ready to rally soon? The best stock pickers were in a pessimistic mood. The number of long hedge fund positions fell by 8 recently. Henry Schein, Inc. (NASDAQ:HSIC) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that HSIC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 39 hedge funds in our database with HSIC positions at the end of the second quarter.

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 peek at the key hedge fund action surrounding Henry Schein, Inc. (NASDAQ:HSIC).

Justin John Ferayorni of Tamarack Capital Management

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

At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HSIC over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Henry Schein, Inc. (NASDAQ:HSIC) was held by Generation Investment Management, which reported holding $1006.3 million worth of stock at the end of September. It was followed by D E Shaw with a $96.4 million position. Other investors bullish on the company included Millennium Management, AQR Capital Management, and Woodline Partners. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Henry Schein, Inc. (NASDAQ:HSIC), around 9.62% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, designating 6.24 percent of its 13F equity portfolio to HSIC.

Because Henry Schein, Inc. (NASDAQ:HSIC) has faced a decline in interest from the smart money, logic holds that there lies a certain “tier” of funds that slashed their full holdings by the end of the third quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cut the biggest investment of all the hedgies followed by Insider Monkey, worth about $15.1 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund sold off about $2.9 million worth. These transactions are important to note, as total hedge fund interest fell by 8 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Henry Schein, Inc. (NASDAQ:HSIC). We will take a look at Dicks Sporting Goods Inc (NYSE:DKS), GDS Holdings Limited (NASDAQ:GDS), Cemex SAB de CV (NYSE:CX), Ozon Holdings PLC (NASDAQ:OZON), Regal Beloit Corporation (NYSE:RBC), Acceleron Pharma Inc (NASDAQ:XLRN), and Global-E Online Ltd. (NASDAQ:GLBE). This group of stocks’ market values match HSIC’s market value.

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As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $1060 million. That figure was $1483 million in HSIC’s case. Acceleron Pharma Inc (NASDAQ:XLRN) is the most popular stock in this table. On the other hand Ozon Holdings PLC (NASDAQ:OZON) is the least popular one with only 13 bullish hedge fund positions. Henry Schein, Inc. (NASDAQ:HSIC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HSIC is 40.3. 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, HSIC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HSIC were disappointed as the stock returned -1.1% 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.