In this article we will analyze whether The Cooper Companies, Inc. (NYSE:COO) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
The Cooper Companies, Inc. (NYSE:COO) has experienced an increase in hedge fund sentiment recently. The Cooper Companies, Inc. (NYSE:COO) was in 43 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that COO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
David Blood of Generation Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. Keeping this in mind we’re going to take a glance at the recent hedge fund action regarding The Cooper Companies, Inc. (NYSE:COO).
Do Hedge Funds Think COO Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 39% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in COO over the last 23 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, David Blood and Al Gore’s Generation Investment Management has the most valuable position in The Cooper Companies, Inc. (NYSE:COO), worth close to $829.9 million, comprising 3.5% of its total 13F portfolio. Sitting at the No. 2 spot is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $107.7 million position; 0.5% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions include Barry Dargan’s Intermede Investment Partners, Arthur B Cohen and Joseph Healey’s Healthcor Management LP and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to The Cooper Companies, Inc. (NYSE:COO), around 3.48% of its 13F portfolio. Intermede Investment Partners is also relatively very bullish on the stock, dishing out 1.73 percent of its 13F equity portfolio to COO.
As aggregate interest increased, some big names were leading the bulls’ herd. Intermede Investment Partners, managed by Barry Dargan, created the most valuable position in The Cooper Companies, Inc. (NYSE:COO). Intermede Investment Partners had $67.8 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $40.2 million investment in the stock during the quarter. The following funds were also among the new COO investors: Efrem Kamen’s Pura Vida Investments, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Efrem Kamen’s Pura Vida Investments.
Let’s now take a look at hedge fund activity in other stocks similar to The Cooper Companies, Inc. (NYSE:COO). We will take a look at FirstEnergy Corp. (NYSE:FE), MGM Resorts International (NYSE:MGM), Farfetch Limited (NYSE:FTCH), Citizens Financial Group Inc (NYSE:CFG), Ubiquiti Inc. (NYSE:UI), CGI Inc. (NYSE:GIB), and MarketAxess Holdings Inc. (NASDAQ:MKTX). This group of stocks’ market caps are closest to COO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FE | 51 | 1840599 | 1 |
| MGM | 57 | 2715848 | 13 |
| FTCH | 57 | 3095281 | 10 |
| CFG | 41 | 579075 | 3 |
| UI | 19 | 278681 | 0 |
| GIB | 15 | 187732 | 0 |
| MKTX | 34 | 672097 | 0 |
| Average | 39.1 | 1338473 | 3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.1 hedge funds with bullish positions and the average amount invested in these stocks was $1338 million. That figure was $1378 million in COO’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 15 bullish hedge fund positions. The Cooper Companies, Inc. (NYSE:COO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COO is 73.3. 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 positive signal but 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately COO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on COO were disappointed as the stock returned 0% since the end of March (through 6/18) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
