At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Bio-Techne Corporation (NASDAQ:TECH) makes for a good investment right now.
Is TECH stock a buy? Investors who are in the know were getting less optimistic. The number of long hedge fund bets shrunk by 6 recently. Bio-Techne Corporation (NASDAQ:TECH) was in 24 hedge funds’ portfolios at the end of December. The all time high for this statistic is 30. Our calculations also showed that TECH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with TECH holdings at the end of September.
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 124 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.
Richard Driehaus of Driehaus Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind let’s take a peek at the new hedge fund action encompassing Bio-Techne Corporation (NASDAQ:TECH).
Do Hedge Funds Think TECH Is A Good Stock To Buy Now?
At the end of December, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in TECH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Bio-Techne Corporation (NASDAQ:TECH) was held by Select Equity Group, which reported holding $67.8 million worth of stock at the end of December. It was followed by Royce & Associates with a $60.5 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Sandler Capital Management allocated the biggest weight to Bio-Techne Corporation (NASDAQ:TECH), around 1.81% of its 13F portfolio. BeaconLight Capital is also relatively very bullish on the stock, designating 1.15 percent of its 13F equity portfolio to TECH.
Seeing as Bio-Techne Corporation (NASDAQ:TECH) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds that decided to sell off their full holdings last quarter. At the top of the heap, Anand Parekh’s Alyeska Investment Group cut the largest investment of the 750 funds monitored by Insider Monkey, worth about $22.4 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund sold off about $1.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Bio-Techne Corporation (NASDAQ:TECH). We will take a look at Dynatrace, Inc. (NYSE:DT), The Boston Beer Company Inc (NYSE:SAM), Wynn Resorts, Limited (NASDAQ:WYNN), Graco Inc. (NYSE:GGG), Qiagen NV (NASDAQ:QGEN), Atmos Energy Corporation (NYSE:ATO), and Booz Allen Hamilton Holding Corporation (NYSE:BAH). All of these stocks’ market caps match TECH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DT | 53 | 2023929 | 7 |
| SAM | 35 | 1143708 | -1 |
| WYNN | 52 | 1104483 | 9 |
| GGG | 25 | 269383 | -5 |
| QGEN | 24 | 670099 | -5 |
| ATO | 25 | 274618 | 7 |
| BAH | 27 | 305001 | -4 |
| Average | 34.4 | 827317 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $827 million. That figure was $302 million in TECH’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand Qiagen NV (NASDAQ:QGEN) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Bio-Techne Corporation (NASDAQ:TECH) is even less popular than QGEN. Our overall hedge fund sentiment score for TECH is 23. 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. Hedge funds clearly dropped the ball on TECH as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on TECH as the stock returned 30.6% since Q4 (through April 19th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
