Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30. What do these smart investors think about Quest Diagnostics Inc (NYSE:DGX)?
Is Quest Diagnostics Inc (NYSE:DGX) worth your attention right now? The smart money is becoming less hopeful. The number of bullish hedge fund positions decreased by 5 lately. DGX was in 27 hedge funds’ portfolios at the end of the third quarter of 2015. There were 32 hedge funds in our database with DGX holdings at the end of the previous quarter. At the end of this article we will also compare DGX to other stocks, including Cemex SAB de CV (ADR) (NYSE:CX), Snap-on Incorporated (NYSE:SNA), and Voya Financial Inc (NYSE:VOYA) to get a better sense of its popularity.
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To most investors, hedge funds are viewed as unimportant, old financial tools of the past. While there are more than 8000 funds trading at present, We hone in on the masters of this club, approximately 700 funds. It is estimated that this group of investors direct the majority of the hedge fund industry’s total asset base, and by keeping an eye on their inimitable investments, Insider Monkey has found numerous investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a look at the fresh action surrounding Quest Diagnostics Inc (NYSE:DGX).
What have hedge funds been doing with Quest Diagnostics Inc (NYSE:DGX)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Tamarack Capital Management, managed by Justin John Ferayorni, holds the biggest position in Quest Diagnostics Inc (NYSE:DGX). Tamarack Capital Management has a $43 million position in the stock, comprising 5.1% of its 13F portfolio. Sitting at the No. 2 spot is Joel Greenblatt’s Gotham Asset Management, with a $36.9 million position; 0.4% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions include Alex Denner’s Sarissa Capital Management, David Harding’s Winton Capital Management and Ken Griffin’s Citadel Investment Group.
Seeing as Quest Diagnostics Inc (NYSE:DGX) has faced bearish sentiment from the smart money, it’s easy to see that there is a sect of hedgies that slashed their entire stakes in the third quarter. Intriguingly, Conan Laughlin’s North Tide Capital dropped the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling about $36.3 million in stock. James Dondero’s fund, Highland Capital Management, also dumped its shares, about $18.1 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Quest Diagnostics Inc (NYSE:DGX) but similarly valued. These stocks are Cemex SAB de CV (ADR) (NYSE:CX), Snap-on Incorporated (NYSE:SNA), Voya Financial Inc (NYSE:VOYA), and Alkermes Plc (NASDAQ:ALKS). This group of stocks’ market valuations resemble DGX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CX | 18 | 186344 | -3 |
| SNA | 31 | 585872 | 6 |
| VOYA | 35 | 1097599 | -5 |
| ALKS | 22 | 523173 | -3 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $598 million. That figure was $318 million in DGX’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table, while Cemex SAB de CV (ADR) (NYSE:CX) is the least popular one with only 18 bullish hedge fund positions. Quest Diagnostics Inc (NYSE:DGX) 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 VOYA might be a better candidate to consider a long position.
