Hedge Funds Are Betting On Alere Inc (ALR)

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Alere Inc (NYSE:ALR).

Alere Inc (NYSE:ALR) was in 39 hedge funds’ portfolios at the end of September. ALR investors should pay attention to an increase in support from the world’s most elite money managers lately. There were 36 hedge funds in our database with ALR positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Arista Networks Inc (NYSE:ANET), Columbia Sportswear Company (NASDAQ:COLM), and Diamondback Energy Inc (NASDAQ:FANG) to gather more data points.

In the eyes of most shareholders, hedge funds are assumed to be unimportant, old investment tools of years past. While there are greater than an 8000 funds in operation at the moment, Our experts hone in on the bigwigs of this group, about 700 funds. These hedge fund managers manage bulk of the smart money’s total asset base, and by shadowing their top stock picks, Insider Monkey has formulated numerous investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s take a peek at the latest action surrounding Alere Inc (NYSE:ALR).

What does the smart money think about Alere Inc (NYSE:ALR)?

At Q3’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. 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 holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the biggest position in Alere Inc (NYSE:ALR). Scopia Capital has a $234.1 million position in the stock, comprising 5% of its 13F portfolio. The second largest stake is held by Iridian Asset Management, managed by David Cohen and Harold Levy, which holds a $214.8 million position; 1.8% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish contain Doug Silverman and Alexander Klabin’s Senator Investment Group, William B. Gray’s Orbis Investment Management and Clifford Fox’s Columbus Circle Investors.

Now, some big names were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, assembled the biggest position in Alere Inc (NYSE:ALR). Alyeska Investment Group had $35.8 million invested in the company at the end of the quarter. Jacob Gottlieb’s Visium Asset Management also made a $33.9 million investment in the stock during the quarter. The following funds were also among the new ALR investors: Brian Ashford-Russell and Tim Woolley’s Polar Capital, Millennium Management Subsidiary’s Decade Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks similar to Alere Inc (NYSE:ALR). These stocks are Arista Networks Inc (NYSE:ANET), Columbia Sportswear Company (NASDAQ:COLM), Diamondback Energy Inc (NASDAQ:FANG), and Teradata Corporation (NYSE:TDC). This group of stocks’ market values resemble ALR’s market value.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $471 million. That figure was $1344 million in ALR’s case. Diamondback Energy Inc (NASDAQ:FANG) is the most popular stock in this table. On the other hand Columbia Sportswear Company (NASDAQ:COLM) is the least popular one with only 19 bullish hedge fund positions. In comparison, Alere Inc (NYSE:ALR), with 39 bullish hedge fund positions, is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.