Do Hedge Funds Love Laboratory Corp. of America Holdings (LH)?

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 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Laboratory Corp. of America Holdings (NYSE:LH) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is Laboratory Corp. of America Holdings (NYSE:LH) a buy here? The best stock pickers were taking a bearish view. The number of long hedge fund positions were cut by 1 in recent months. Laboratory Corp. of America Holdings (NYSE:LH) was in 53 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 66. Our calculations also showed that LH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 54 hedge funds in our database with LH holdings at the end of March.

In today’s marketplace there are many gauges investors have at their disposal to evaluate publicly traded companies. Some of the most under-the-radar gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the broader indices by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .

Harold Levy of Iridian Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 let’s analyze the new hedge fund action regarding Laboratory Corp. of America Holdings (NYSE:LH).

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

At the end of June, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from one quarter earlier. On the other hand, there were a total of 52 hedge funds with a bullish position in LH a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Melvin Capital Management was the largest shareholder of Laboratory Corp. of America Holdings (NYSE:LH), with a stake worth $537.9 million reported as of the end of June. Trailing Melvin Capital Management was Viking Global, which amassed a stake valued at $378.9 million. Iridian Asset Management, Melvin Capital Management, and Millennium 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 JANA Partners allocated the biggest weight to Laboratory Corp. of America Holdings (NYSE:LH), around 13.17% of its 13F portfolio. Scoggin is also relatively very bullish on the stock, setting aside 5.91 percent of its 13F equity portfolio to LH.

Judging by the fact that Laboratory Corp. of America Holdings (NYSE:LH) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few hedge funds who were dropping their full holdings by the end of the second quarter. It’s worth mentioning that Ricky Sandler’s Eminence Capital dropped the largest stake of all the hedgies watched by Insider Monkey, comprising an estimated $136.7 million in stock, and Larry Robbins’s Glenview Capital was right behind this move, as the fund cut about $56.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to Laboratory Corp. of America Holdings (NYSE:LH). We will take a look at Hess Corporation (NYSE:HES), Tyson Foods, Inc. (NYSE:TSN), Fifth Third Bancorp (NASDAQ:FITB), Alexandria Real Estate Equities Inc (NYSE:ARE), Rogers Communications Inc. (NYSE:RCI), Sirius XM Holdings Inc (NASDAQ:SIRI), and Genmab A/S (NASDAQ:GMAB). This group of stocks’ market valuations match LH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $479 million. That figure was $2555 million in LH’s case. Fifth Third Bancorp (NASDAQ:FITB) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Laboratory Corp. of America Holdings (NYSE:LH) is more popular among hedge funds. Our overall hedge fund sentiment score for LH is 78.1. 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. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately LH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LH were disappointed as the stock returned 1.3% since the end of the second quarter (through 10/1) 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.