Henry Schein, Inc. (HSIC) Fell Out Of Favor With Hedge Funds

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Henry Schein, Inc. (NASDAQ:HSIC).

Henry Schein, Inc. (NASDAQ:HSIC) investors should be aware of a decrease in activity from the world’s largest hedge funds recently. Henry Schein, Inc. (NASDAQ:HSIC) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that HSIC isn’t 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. Keeping this in mind let’s review the recent hedge fund action encompassing Henry Schein, Inc. (NASDAQ:HSIC).

Joel Greenblatt of Gotham Asset Management

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

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in HSIC a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

More specifically, Generation Investment Management was the largest shareholder of Henry Schein, Inc. (NASDAQ:HSIC), with a stake worth $1006.3 million reported as of the end of September. Trailing Generation Investment Management was D E Shaw, which amassed a stake valued at $96.4 million. Millennium Management, AQR Capital Management, and Woodline Partners 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 Tamarack Capital Management allocated the biggest weight to Henry Schein, Inc. (NASDAQ:HSIC), around 9.62% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, setting aside 6.24 percent of its 13F equity portfolio to HSIC.

Since Henry Schein, Inc. (NASDAQ:HSIC) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers who were dropping their full holdings by the end of the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group dumped the largest stake of the 750 funds monitored by Insider Monkey, worth an estimated $15.1 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund said goodbye to about $2.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Henry Schein, Inc. (NASDAQ:HSIC) but similarly valued. We will take a look at Dicks Sporting Goods Inc (NYSE:DKS), GDS Holdings Limited (NASDAQ:GDS), Cemex SAB de CV (NYSE:CX), Ozon Holdings PLC (NASDAQ:OZON), Regal Beloit Corporation (NYSE:RBC), Acceleron Pharma Inc (NASDAQ:XLRN), and Global-E Online Ltd. (NASDAQ:GLBE). This group of stocks’ market caps match HSIC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $1060 million. That figure was $1483 million in HSIC’s case. Acceleron Pharma Inc (NASDAQ:XLRN) is the most popular stock in this table. On the other hand Ozon Holdings PLC (NASDAQ:OZON) is the least popular one with only 13 bullish hedge fund positions. Henry Schein, Inc. (NASDAQ:HSIC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HSIC is 40.3. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately HSIC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HSIC were disappointed as the stock returned -6.7% since the end of September (through 11/30) 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.