Hedge Funds Aren’t Crazy About Bio-Rad Laboratories, Inc. (BIO) Anymore

In this article we will take a look at whether hedge funds think Bio-Rad Laboratories, Inc. (NYSE:BIO) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Bio-Rad Laboratories, Inc. (NYSE:BIO) the right pick for your portfolio? Prominent investors were taking a pessimistic view. The number of bullish hedge fund positions were cut by 3 in recent months. Bio-Rad Laboratories, Inc. (NYSE:BIO) was in 41 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 54. Our calculations also showed that BIO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Ian Wace of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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 go over the recent hedge fund action surrounding Bio-Rad Laboratories, Inc. (NYSE:BIO).

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

Heading into the third quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the first quarter of 2020. On the other hand, there were a total of 54 hedge funds with a bullish position in BIO a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

More specifically, Marshall Wace LLP was the largest shareholder of Bio-Rad Laboratories, Inc. (NYSE:BIO), with a stake worth $280.3 million reported as of the end of June. Trailing Marshall Wace LLP was Polar Capital, which amassed a stake valued at $127.4 million. Intermede Investment Partners, AQR Capital Management, and Fisher Asset 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 Tower House Partners allocated the biggest weight to Bio-Rad Laboratories, Inc. (NYSE:BIO), around 14.32% of its 13F portfolio. Intermede Investment Partners is also relatively very bullish on the stock, setting aside 2.74 percent of its 13F equity portfolio to BIO.

Judging by the fact that Bio-Rad Laboratories, Inc. (NYSE:BIO) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that decided to sell off their full holdings in the second quarter. At the top of the heap, Michael Gelband’s ExodusPoint Capital cut the largest position of the “upper crust” of funds monitored by Insider Monkey, valued at about $5 million in stock. Krishen Sud’s fund, Sivik Global Healthcare, also cut its stock, about $3.7 million worth. These transactions are important to note, as total hedge fund interest fell by 3 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to Bio-Rad Laboratories, Inc. (NYSE:BIO). These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Darden Restaurants, Inc. (NYSE:DRI), Smith & Nephew plc (NYSE:SNN), Hewlett Packard Enterprise Company (NYSE:HPE), Akamai Technologies, Inc. (NASDAQ:AKAM), Ulta Beauty, Inc. (NASDAQ:ULTA), and HEICO Corporation (NYSE:HEI). This group of stocks’ market values are similar to BIO’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $720 million. That figure was $1293 million in BIO’s case. Darden Restaurants, Inc. (NYSE:DRI) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 13 bullish hedge fund positions. Bio-Rad Laboratories, Inc. (NYSE:BIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BIO is 69.9. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on BIO as the stock returned 11.5% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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