Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the fourth quarter, many investors lost money due to unpredictable events such as the sudden increase in long-term interest rates and unintended consequences of the trade war with China. Nevertheless, many of the stocks that tanked in the fourth quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Quidel Corporation (NASDAQ:QDEL) changed recently.
Quidel Corporation (NASDAQ:QDEL) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that qdel isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to check out the new hedge fund action surrounding Quidel Corporation (NASDAQ:QDEL).
What have hedge funds been doing with Quidel Corporation (NASDAQ:QDEL)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in QDEL over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GAMCO Investors was the largest shareholder of Quidel Corporation (NASDAQ:QDEL), with a stake worth $24.7 million reported as of the end of September. Trailing GAMCO Investors was Renaissance Technologies, which amassed a stake valued at $22.4 million. Marshall Wace LLP, D E Shaw, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Quidel Corporation (NASDAQ:QDEL). Marshall Wace LLP had $18.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $8.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Roger Ibbotson’s Zebra Capital Management, Minhua Zhang’s Weld Capital Management, and Brandon Haley’s Holocene Advisors.
Let’s check out hedge fund activity in other stocks similar to Quidel Corporation (NASDAQ:QDEL). These stocks are Chesapeake Energy Corporation (NYSE:CHK), NxStage Medical, Inc. (NASDAQ:NXTM), Trustmark Corp (NASDAQ:TRMK), and B&G Foods, Inc. (NYSE:BGS). All of these stocks’ market caps are closest to QDEL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHK | 15 | 74956 | -7 |
| NXTM | 28 | 569758 | -4 |
| TRMK | 10 | 13053 | -1 |
| BGS | 10 | 127033 | -3 |
| Average | 15.75 | 196200 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $94 million in QDEL’s case. NxStage Medical, Inc. (NASDAQ:NXTM) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 10 bullish hedge fund positions. Quidel Corporation (NASDAQ:QDEL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on QDEL, though not to the same extent, as the stock returned 23.4% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
