Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Quest Diagnostics Inc (NYSE:DGX) ready to rally soon? Hedge funds are in a bearish mood. The number of long hedge fund bets went down by 1 lately. 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 Cenovus Energy Inc (USA) (NYSE:CVE), Oneok Partners LP (NYSE:OKS), and ArcelorMittal (ADR) (NYSE:MT) to gather more data points.
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Hedge fund activity in Quest Diagnostics Inc (NYSE:DGX)
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 4% from the second quarter of 2016 and the second quarterly drop in hedge fund ownership in a row. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management has the biggest position in Quest Diagnostics Inc (NYSE:DGX), worth close to $107.9 million. The second most bullish fund manager is Marshall Wace LLP, managed by Paul Marshall and Ian Wace, which holds a $78.1 million position. Remaining peers with similar optimism include John W. Rogers’ Ariel Investments, Joel Greenblatt’s Gotham Asset Management and Bernard Horn’s Polaris Capital Management.
Seeing as Quest Diagnostics Inc (NYSE:DGX) has witnessed declining sentiment from the smart money, it’s safe to say that there is a sect of funds who sold off their positions entirely heading into Q4. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group sold off the biggest investment of the 700 funds monitored by Insider Monkey, comprising close to $18.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dumped about $18.5 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 fund heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Quest Diagnostics Inc (NYSE:DGX) but similarly valued. These stocks are Cenovus Energy Inc (USA) (NYSE:CVE), Oneok Partners LP (NYSE:OKS), ArcelorMittal (ADR) (NYSE:MT), and MPLX LP (NYSE:MPLX). All of these stocks’ market caps are closest to DGX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVE | 20 | 364500 | -3 |
| OKS | 9 | 33692 | 2 |
| MT | 19 | 226760 | -6 |
| MPLX | 14 | 258926 | 2 |
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $349 million in DGX’s case. Cenovus Energy Inc (USA) (NYSE:CVE) is the most popular stock in this table. On the other hand Oneok Partners LP (NYSE:OKS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Quest Diagnostics Inc (NYSE:DGX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio, bearing in mind that some hedge funds have been selling off the stock recently.
Disclosure: None
