Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
DENTSPLY International Inc. (NASDAQ:XRAY) has experienced an increase in hedge fund interest lately, with 4 more hedge funds owning shares of the stock. At the end of this article we will also compare XRAY to other stocks including Henry Schein, Inc. (NASDAQ:HSIC), Royal Caribbean Cruises Ltd. (NYSE:RCL), and Agilent Technologies Inc. (NYSE:A) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s view the fresh action encompassing DENTSPLY International Inc. (NASDAQ:XRAY).
What have hedge funds been doing with DENTSPLY International Inc. (NASDAQ:XRAY)?
Heading into the fourth quarter of 2016, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a 14% rise from the second quarter of 2016, the third straight quarterly increase in hedge fund onwership. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the most valuable position in DENTSPLY International Inc. (NASDAQ:XRAY). Select Equity Group has a $738 million position in the stock, comprising 6.4% of its 13F portfolio. On Select Equity Group’s heels is Generation Investment Management, managed by David Blood and Al Gore, which holds a $206.8 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Paul Marshall and Ian Wace’s Marshall Wace LLP, Andreas Halvorsen’s Viking Global and Noam Gottesman’s GLG Partners.
With general bullishness amongst the heavyweights, key money managers have jumped into DENTSPLY International Inc. (NASDAQ:XRAY) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in DENTSPLY International Inc. (NASDAQ:XRAY). Marshall Wace LLP had $59.7 million invested in the company at the end of the quarter. Andreas Halvorsen’s Viking Global also initiated a $41.3 million position during the quarter. The following funds were also among the new XRAY investors: Clint Carlson’s Carlson Capital, Israel Englander’s Millennium Management, and Vishal Saluja and Pham Quang’s Endurant Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as DENTSPLY International Inc. (NASDAQ:XRAY) but similarly valued. We will take a look at Henry Schein, Inc. (NASDAQ:HSIC), Royal Caribbean Cruises Ltd. (NYSE:RCL), Agilent Technologies Inc. (NYSE:A), and Interactive Brokers Group, Inc. (NASDAQ:IBKR). This group of stocks’ market caps are closest to XRAY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HSIC | 23 | 388072 | 0 |
| RCL | 26 | 821060 | -13 |
| A | 41 | 1395703 | 1 |
| IBKR | 26 | 588586 | -4 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $798 million. That figure was $1.30 billion in XRAY’s case. Agilent Technologies Inc. (NYSE:A) is the most popular stock in this table. On the other hand Henry Schein, Inc. (NASDAQ:HSIC) is the least popular one with only 23 bullish hedge fund positions. DENTSPLY International Inc. (NASDAQ:XRAY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Agilent might be a better candidate to consider a long position.
Disclosure: None
