Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. Trends reversed 180 degrees during the first quarter amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the first quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Bio-Rad Laboratories, Inc. (NYSE:BIO).
Bio-Rad Laboratories, Inc. (NYSE:BIO) shareholders have witnessed an increase in hedge fund interest in recent months. BIO was in 37 hedge funds’ portfolios at the end of March. There were 35 hedge funds in our database with BIO positions at the end of the previous quarter. Our calculations also showed that bio isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the key hedge fund action encompassing Bio-Rad Laboratories, Inc. (NYSE:BIO).
How are hedge funds trading Bio-Rad Laboratories, Inc. (NYSE:BIO)?
At the end of the first quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BIO over the last 15 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Bio-Rad Laboratories, Inc. (NYSE:BIO) was held by Millennium Management, which reported holding $128.7 million worth of stock at the end of March. It was followed by Polar Capital with a $76.3 million position. Other investors bullish on the company included AQR Capital Management, Ariel Investments, and Fisher Asset Management.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Tower House Partners, managed by Paolo Mortarotti, initiated the most outsized position in Bio-Rad Laboratories, Inc. (NYSE:BIO). Tower House Partners had $57.5 million invested in the company at the end of the quarter. John Lykouretzos’s Hoplite Capital Management also initiated a $32.7 million position during the quarter. The other funds with new positions in the stock are Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, Andrew Sandler’s Sandler Capital Management, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Bio-Rad Laboratories, Inc. (NYSE:BIO). These stocks are Mohawk Industries, Inc. (NYSE:MHK), CF Industries Holdings, Inc. (NYSE:CF), Henry Schein, Inc. (NASDAQ:HSIC), and Huaneng Power International Inc (NYSE:HNP). This group of stocks’ market values match BIO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MHK | 34 | 1887240 | 2 |
| CF | 32 | 763506 | -10 |
| HSIC | 22 | 1272395 | -5 |
| HNP | 3 | 3019 | 0 |
| Average | 22.75 | 981540 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $982 million. That figure was $889 million in BIO’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Bio-Rad Laboratories, Inc. (NYSE:BIO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately BIO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BIO were disappointed as the stock returned -6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
