Is QDEL Stock A Buy or Sell?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Quidel Corporation (NASDAQ:QDEL).

Is QDEL stock a buy? The best stock pickers were becoming less confident. The number of long hedge fund positions shrunk by 13 in recent months. Quidel Corporation (NASDAQ:QDEL) was in 29 hedge funds’ portfolios at the end of December. The all time high for this statistic is 42. Our calculations also showed that QDEL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 42 hedge funds in our database with QDEL positions at the end of the third quarter.

James E. Flynn of Deerfield Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. 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 we’re going to take a glance at the recent hedge fund action encompassing Quidel Corporation (NASDAQ:QDEL).

Do Hedge Funds Think QDEL Is A Good Stock To Buy Now?

At the end of December, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in QDEL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Arrowstreet Capital held the most valuable stake in Quidel Corporation (NASDAQ:QDEL), which was worth $71.3 million at the end of the fourth quarter. On the second spot was Holocene Advisors which amassed $58.4 million worth of shares. Deerfield Management, AQR Capital Management, and GAMCO Investors 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 Birchview Capital allocated the biggest weight to Quidel Corporation (NASDAQ:QDEL), around 6.07% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, earmarking 5.9 percent of its 13F equity portfolio to QDEL.

Seeing as Quidel Corporation (NASDAQ:QDEL) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers that slashed their entire stakes in the fourth quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors cut the biggest investment of all the hedgies followed by Insider Monkey, worth close to $18.8 million in stock. Phill Gross and Robert Atchinson’s fund, Adage Capital Management, also dropped its stock, about $16.5 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 13 funds in the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Quidel Corporation (NASDAQ:QDEL) but similarly valued. We will take a look at The Gap Inc. (NYSE:GPS), Gerdau SA (NYSE:GGB), Hyatt Hotels Corporation (NYSE:H), AECOM (NYSE:ACM), Berry Global Group Inc (NYSE:BERY), Nielsen Holdings plc (NYSE:NLSN), and Kodiak Sciences Inc (NASDAQ:KOD). This group of stocks’ market values resemble QDEL’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $1122 million. That figure was $401 million in QDEL’s case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 15 bullish hedge fund positions. Quidel Corporation (NASDAQ:QDEL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for QDEL is 43.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately QDEL wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); QDEL investors were disappointed as the stock returned -29.1% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.