The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Envista Holdings Corporation (NYSE:NVST) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Envista Holdings Corporation (NYSE:NVST) investors should pay attention to a decrease in support from the world’s most elite money managers recently. Envista Holdings Corporation (NYSE:NVST) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistics is 42. Our calculations also showed that NVST isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
John Rogers of Ariel Investments
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Now we’re going to take a gander at the key hedge fund action encompassing Envista Holdings Corporation (NYSE:NVST).
How are hedge funds trading Envista Holdings Corporation (NYSE:NVST)?
At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NVST over the last 20 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Ariel Investments was the largest shareholder of Envista Holdings Corporation (NYSE:NVST), with a stake worth $129.6 million reported as of the end of September. Trailing Ariel Investments was Viking Global, which amassed a stake valued at $95.4 million. Paradice Investment Management, Polar Capital, and Balyasny Asset Management 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 Paradice Investment Management allocated the biggest weight to Envista Holdings Corporation (NYSE:NVST), around 4.66% of its 13F portfolio. Iron Triangle Partners is also relatively very bullish on the stock, earmarking 2.66 percent of its 13F equity portfolio to NVST.
Seeing as Envista Holdings Corporation (NYSE:NVST) has witnessed declining sentiment from the smart money, we can see that there exists a select few money managers who were dropping their entire stakes by the end of the second quarter. Interestingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $13.3 million in stock, and Michael Castor’s Sio Capital was right behind this move, as the fund dumped about $12.8 million worth. These transactions are important to note, as total hedge fund interest was cut by 1 funds by the end of the second quarter.
Let’s go over hedge fund activity in other stocks similar to Envista Holdings Corporation (NYSE:NVST). We will take a look at RBC Bearings Incorporated (NASDAQ:ROLL), Mattel, Inc. (NASDAQ:MAT), Cosan Limited (NYSE:CZZ), Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), Clean Harbors Inc (NYSE:CLH), PTC Therapeutics, Inc. (NASDAQ:PTCT), and Air Lease Corp (NYSE:AL). This group of stocks’ market valuations are closest to NVST’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROLL | 17 | 61588 | 8 |
| MAT | 25 | 595357 | 8 |
| CZZ | 14 | 160277 | -1 |
| DCPH | 31 | 761061 | 3 |
| CLH | 19 | 237400 | -6 |
| PTCT | 31 | 278428 | 3 |
| AL | 22 | 618666 | 2 |
| Average | 22.7 | 387540 | 2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $396 million in NVST’s case. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is the most popular stock in this table. On the other hand Cosan Limited (NYSE:CZZ) is the least popular one with only 14 bullish hedge fund positions. Envista Holdings Corporation (NYSE:NVST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NVST is 39.6. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on NVST as the stock returned 17% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
