Hedge Funds Are Coming Back To Quidel Corporation (QDEL)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Quidel Corporation (NASDAQ:QDEL)? The smart money sentiment can provide an answer to this question.

Quidel Corporation (NASDAQ:QDEL) has experienced an increase in hedge fund sentiment lately. Quidel Corporation (NASDAQ:QDEL) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. Our calculations also showed that QDEL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Now let’s take a peek at the latest hedge fund action surrounding Quidel Corporation (NASDAQ:QDEL).

Cliff Asness of AQR Capital Management

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

Heading into the fourth quarter of 2021, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the second quarter of 2021. On the other hand, there were a total of 42 hedge funds with a bullish position in QDEL a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in Quidel Corporation (NASDAQ:QDEL) was held by Rima Senvest Management, which reported holding $122.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $30.1 million position. Other investors bullish on the company included GAMCO Investors, GLG Partners, and AQR Capital Management. In terms of the portfolio weights assigned to each position Birchview Capital allocated the biggest weight to Quidel Corporation (NASDAQ:QDEL), around 5.73% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, designating 3.49 percent of its 13F equity portfolio to QDEL.

Now, specific money managers have jumped into Quidel Corporation (NASDAQ:QDEL) headfirst. Alyeska Investment Group, managed by Anand Parekh, initiated the largest position in Quidel Corporation (NASDAQ:QDEL). Alyeska Investment Group had $10.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $7.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, Israel Englander’s Millennium Management, and Greg Poole’s Echo Street Capital Management.

Let’s now review hedge fund activity in other stocks similar to Quidel Corporation (NASDAQ:QDEL). We will take a look at Manpowergroup Inc (NYSE:MAN), Autohome Inc (NYSE:ATHM), Sonoco Products Company (NYSE:SON), Vicor Corp (NASDAQ:VICR), Graphic Packaging Holding Company (NYSE:GPK), Cazoo Group Ltd (NYSE:CZOO), and Louisiana-Pacific Corporation (NYSE:LPX). This group of stocks’ market valuations are closest to QDEL’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $253 million in QDEL’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Autohome Inc (NYSE:ATHM) is the least popular one with only 11 bullish hedge fund positions. Quidel Corporation (NASDAQ:QDEL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for QDEL is 45.7. 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 negative signal and 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 surpassed the market again by 3.6 percentage points. Unfortunately QDEL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); QDEL investors were disappointed as the stock returned -4.4% since the end of September (through 12/31) 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 most of these stocks already outperformed the market in 2021.

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