Hedge Funds Keep Buying Thermo Fisher Scientific Inc. (TMO)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Thermo Fisher Scientific Inc. (NYSE:TMO).

Is Thermo Fisher Scientific Inc. (NYSE:TMO) a marvelous investment today? The best stock pickers were taking an optimistic view. The number of bullish hedge fund positions improved by 7 lately. Thermo Fisher Scientific Inc. (NYSE:TMO) was in 94 hedge funds’ portfolios at the end of September. The all time high for this statistic is 89. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TMO ranked 23rd among the 30 most popular stocks among hedge funds (click for Q3 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 we’re going to take a gander at the fresh hedge fund action encompassing Thermo Fisher Scientific Inc. (NYSE:TMO).

David Blood of Generation Investment Management

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

Heading into the fourth quarter of 2021, a total of 94 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TMO over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Thermo Fisher Scientific Inc. (NYSE:TMO). Fisher Asset Management has a $1.1498 billion position in the stock, comprising 0.7% of its 13F portfolio. On Fisher Asset Management’s heels is Generation Investment Management, led by David Blood and Al Gore, holding a $962.4 million position; 4% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish encompass Nicolai Tangen’s Ako Capital, Cliff Asness’s AQR Capital Management and Farallon Capital. In terms of the portfolio weights assigned to each position Copernicus Capital Management allocated the biggest weight to Thermo Fisher Scientific Inc. (NYSE:TMO), around 13.83% of its 13F portfolio. Cryder Capital is also relatively very bullish on the stock, setting aside 11.03 percent of its 13F equity portfolio to TMO.

As one would reasonably expect, key money managers were leading the bulls’ herd. Suvretta Capital Management, managed by Aaron Cowen, created the largest position in Thermo Fisher Scientific Inc. (NYSE:TMO). Suvretta Capital Management had $186.1 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also initiated a $71.4 million position during the quarter. The other funds with brand new TMO positions are Anand Parekh’s Alyeska Investment Group, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and Louis Bacon’s Moore Global Investments.

Let’s go over hedge fund activity in other stocks similar to Thermo Fisher Scientific Inc. (NYSE:TMO). We will take a look at Verizon Communications Inc. (NYSE:VZ), Eli Lilly and Company (NYSE:LLY), Novo Nordisk A/S (NYSE:NVO), Danaher Corporation (NYSE:DHR), Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), and PepsiCo, Inc. (NASDAQ:PEP). This group of stocks’ market valuations resemble TMO’s market valuation.

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As you can see these stocks had an average of 58.6 hedge funds with bullish positions and the average amount invested in these stocks was $5738 million. That figure was $8210 million in TMO’s case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand Novo Nordisk A/S (NYSE:NVO) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Thermo Fisher Scientific Inc. (NYSE:TMO) is more popular among hedge funds. Our overall hedge fund sentiment score for TMO is 90. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on TMO as the stock returned 10.8% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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