Hedge Funds Are Betting On Quest Diagnostics Inc (DGX)

Quest Diagnostics Inc (NYSE:DGX) was in 32 hedge funds’ portfolio at the end of the first quarter of 2013. DGX investors should be aware of an increase in hedge fund sentiment recently. There were 21 hedge funds in our database with DGX positions at the end of the previous quarter.

In today’s marketplace, there are dozens of methods shareholders can use to monitor publicly traded companies. A pair of the most useful are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top fund managers can beat the S&P 500 by a solid margin (see just how much).

Just as beneficial, positive insider trading activity is another way to parse down the marketplace. Just as you’d expect, there are lots of motivations for an insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this method if “monkeys” understand what to do (learn more here).

Keeping this in mind, let’s take a glance at the recent action regarding Quest Diagnostics Inc (NYSE:DGX).

What does the smart money think about Quest Diagnostics Inc (NYSE:DGX)?

In preparation for this quarter, a total of 32 of the hedge funds we track held long positions in this stock, a change of 52% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings considerably.

When looking at the hedgies we track, Relational Investors, managed by Ralph V. Whitworth, holds the biggest position in Quest Diagnostics Inc (NYSE:DGX). Relational Investors has a $233.1 million position in the stock, comprising 4.5% of its 13F portfolio. The second largest stake is held by Ric Dillon of Diamond Hill Capital, with a $110.3 million position; 1.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include Ricky Sandler’s Eminence Capital, Bernard Horn’s Polaris Capital Management and Jim Simons’s Renaissance Technologies.

As one would reasonably expect, key money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, established the most outsized position in Quest Diagnostics Inc (NYSE:DGX). Renaissance Technologies had 47.8 million invested in the company at the end of the quarter. Boaz Weinstein’s Saba Capital also made a $33.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Clint Carlson’s Carlson Capital, Louis Bacon’s Moore Global Investments, and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Insider trading activity in Quest Diagnostics Inc (NYSE:DGX)

Bullish insider trading is most useful when the company in focus has experienced transactions within the past 180 days. Over the latest half-year time frame, Quest Diagnostics Inc (NYSE:DGX) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Quest Diagnostics Inc (NYSE:DGX). These stocks are Covance Inc. (NYSE:CVD), Agilent Technologies Inc. (NYSE:A), Mettler-Toledo International Inc. (NYSE:MTD), Life Technologies Corp. (NASDAQ:LIFE), and Laboratory Corp. of America Holdings (NYSE:LH). All of these stocks are in the medical laboratories & research industry and their market caps resemble DGX’s market cap.