While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Thermo Fisher Scientific Inc. (NYSE:TMO).
Thermo Fisher Scientific Inc. (NYSE:TMO) was in 80 hedge funds’ portfolios at the end of September. The all time high for this statistics is 80. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TMO shareholders have witnessed an increase in hedge fund sentiment recently. There were 73 hedge funds in our database with TMO holdings at the end of June. Our calculations also showed that TMO isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
According to most market participants, hedge funds are perceived as slow, outdated investment vehicles of years past. While there are over 8000 funds trading at the moment, Our researchers hone in on the moguls of this club, about 850 funds. These hedge fund managers direct most of all hedge funds’ total capital, and by observing their best equity investments, Insider Monkey has revealed a number of investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
William Von Mueffling of Cantillon Capital Management
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How have hedgies been trading Thermo Fisher Scientific Inc. (NYSE:TMO)?
At third quarter’s end, a total of 80 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TMO over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Thermo Fisher Scientific Inc. (NYSE:TMO), with a stake worth $713 million reported as of the end of September. Trailing Fisher Asset Management was Viking Global, which amassed a stake valued at $608.1 million. Generation Investment Management, Farallon Capital, and Cantillon Capital 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 Cryder Capital allocated the biggest weight to Thermo Fisher Scientific Inc. (NYSE:TMO), around 14.54% of its 13F portfolio. Thames Capital Management is also relatively very bullish on the stock, earmarking 4.51 percent of its 13F equity portfolio to TMO.
As aggregate interest increased, key money managers have been driving this bullishness. Ako Capital, managed by Nicolai Tangen, created the most valuable position in Thermo Fisher Scientific Inc. (NYSE:TMO). Ako Capital had $192.2 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors also initiated a $26.4 million position during the quarter. The other funds with brand new TMO positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Thermo Fisher Scientific Inc. (NYSE:TMO) but similarly valued. These stocks are Cisco Systems, Inc. (NASDAQ:CSCO), McDonald’s Corporation (NYSE:MCD), Novo Nordisk A/S (NYSE:NVO), The Unilever Group (NYSE:UL), Costco Wholesale Corporation (NASDAQ:COST), ASML Holding N.V. (NASDAQ:ASML), and AbbVie Inc (NYSE:ABBV). This group of stocks’ market caps are closest to TMO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSCO | 59 | 3931205 | 0 |
| MCD | 65 | 2480040 | 8 |
| NVO | 22 | 3294003 | -2 |
| UL | 13 | 159946 | 0 |
| COST | 73 | 3850375 | 12 |
| ASML | 23 | 2057327 | -2 |
| ABBV | 82 | 6293077 | -7 |
| Average | 48.1 | 3152282 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.1 hedge funds with bullish positions and the average amount invested in these stocks was $3152 million. That figure was $4972 million in TMO’s case. AbbVie Inc (NYSE:ABBV) is the most popular stock in this table. On the other hand The Unilever Group (NYSE:UL) is the least popular one with only 13 bullish hedge fund positions. Thermo Fisher Scientific Inc. (NYSE:TMO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TMO is 88.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately TMO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TMO were disappointed as the stock returned 2.7% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Thermo Fisher Scientific Inc. (NYSE:TMO)
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Disclosure: None. This article was originally published at Insider Monkey.
