Is Meridian Bioscience, Inc. (VIVO) A Good Stock To Buy?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Meridian Bioscience, Inc. (NASDAQ:VIVO) .

Meridian Bioscience, Inc. (NASDAQ:VIVO) shareholders have witnessed a decrease in hedge fund interest recently. 16 hedge funds that we track were long the stock on September 30. There were 19 hedge funds in our database with VIVO positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as First Commonwealth Financial (NYSE:FCF), Greenbrier Companies Inc (NYSE:GBX), and Innophos Holdings, Inc. (NASDAQ:IPHS) to gather more data points.

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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Hedge fund activity in Meridian Bioscience, Inc. (NASDAQ:VIVO)

Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 16% drop from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in VIVO heading into this year, so smart money ownership is still up for the year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies has the biggest position in Meridian Bioscience, Inc. (NASDAQ:VIVO), worth close to $36.9 million. On Renaissance Technologies’ heels is Joel Greenblatt of Gotham Asset Management, with a $4.8 million position. Remaining hedge funds and institutional investors with similar optimism include Ken Griffin’s Citadel Investment Group, Mario Gabelli’s GAMCO Investors, and Richard S. Meisenberg’s ACK Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that Meridian Bioscience, Inc. (NASDAQ:VIVO) has weathered falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Matthew Tewksbury’s Stevens Capital Management said goodbye to the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $0.4 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund said goodbye to about $0.4 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to Meridian Bioscience, Inc. (NASDAQ:VIVO). These stocks are First Commonwealth Financial (NYSE:FCF), Greenbrier Companies Inc (NYSE:GBX), Innophos Holdings, Inc. (NASDAQ:IPHS), and TriMas Corp (NASDAQ:TRS). This group of stocks’ market valuations match VIVO’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $61 million in VIVO’s case. Greenbrier Companies Inc (NYSE:GBX) is the most popular stock in this table. On the other hand First Commonwealth Financial (NYSE:FCF) is the least popular one with only 5 bullish hedge fund positions. Meridian Bioscience, Inc. (NASDAQ:VIVO) 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 GBX might be a better candidate to consider taking a long position in.

Disclosure: None