Should You Avoid Hologic, Inc. (HOLX)?

Hologic, Inc. (NASDAQ:HOLX) has seen a decrease in hedge fund sentiment in recent months.

According to most stock holders, hedge funds are assumed to be worthless, outdated investment vehicles of the past. While there are more than 8000 funds with their doors open today, we choose to focus on the top tier of this group, around 450 funds. It is estimated that this group has its hands on the majority of the smart money’s total asset base, and by watching their top picks, we have determined a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, positive insider trading activity is a second way to parse down the investments you’re interested in. There are lots of reasons for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this method if shareholders know where to look (learn more here).

Consequently, it’s important to take a look at the key action surrounding Hologic, Inc. (NASDAQ:HOLX).

What does the smart money think about Hologic, Inc. (NASDAQ:HOLX)?

In preparation for this quarter, a total of 33 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Osterweis Capital Management, managed by John Osterweis, holds the largest position in Hologic, Inc. (NASDAQ:HOLX). Osterweis Capital Management has a $78.7 million position in the stock, comprising 3% of its 13F portfolio. On Osterweis Capital Management’s heels is Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, which held a $59.7 million position; 1.8% of its 13F portfolio is allocated to the company. Other peers that are bullish include Daniel S. Och’s OZ Management, Irving Kahn’s Kahn Brothers and Jacob Doft’s Highline Capital Management.

Due to the fact that Hologic, Inc. (NASDAQ:HOLX) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of money managers that slashed their positions entirely in Q1. At the top of the heap, Steven Cohen’s SAC Capital Advisors dumped the biggest stake of the 450+ funds we key on, worth about $26.5 million in stock.. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $21.4 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Hologic, Inc. (NASDAQ:HOLX)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has seen transactions within the past 180 days. Over the last six-month time period, Hologic, Inc. (NASDAQ:HOLX) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Hologic, Inc. (NASDAQ:HOLX). These stocks are Smith & Nephew plc (ADR) (NYSE:SNN), Edwards Lifesciences Corp (NYSE:EW), Sirona Dental Systems, Inc. (NASDAQ:SIRO), Varian Medical Systems, Inc. (NYSE:VAR), and ResMed Inc. (NYSE:RMD). All of these stocks are in the medical appliances & equipment industry and their market caps are closest to HOLX’s market cap.

With the results exhibited by the aforementioned time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Hologic, Inc. (NASDAQ:HOLX) shareholders fit into this picture quite nicely.

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