Was The Smart Money Right About Abbott Laboratories (ABT)?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Abbott Laboratories (NYSE:ABT).

Is Abbott Laboratories (NYSE:ABT) a worthy investment right now? The smart money was taking a pessimistic view. The number of long hedge fund bets retreated by 4 lately. Abbott Laboratories (NYSE:ABT) was in 61 hedge funds’ portfolios at the end of June. The all time high for this statistic is 67. Our calculations also showed that ABT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 65 hedge funds in our database with ABT positions at the end of the first quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Steven Cohen of Point72 Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We check out articles like Warren Buffett’s 3 money saving tips that provide inflation and volatility hedges. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to go over the key hedge fund action encompassing Abbott Laboratories (NYSE:ABT).

Do Hedge Funds Think ABT Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. By comparison, 67 hedge funds held shares or bullish call options in ABT a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

The largest stake in Abbott Laboratories (NYSE:ABT) was held by Fisher Asset Management, which reported holding $939.2 million worth of stock at the end of June. It was followed by Diamond Hill Capital with a $722.7 million position. Other investors bullish on the company included BlueSpruce Investments, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position BlueSpruce Investments allocated the biggest weight to Abbott Laboratories (NYSE:ABT), around 8.91% of its 13F portfolio. Coe Capital Management is also relatively very bullish on the stock, designating 3.11 percent of its 13F equity portfolio to ABT.

Due to the fact that Abbott Laboratories (NYSE:ABT) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few hedgies that decided to sell off their positions entirely heading into Q3. Intriguingly, Daniel S. Och’s OZ Management cut the biggest investment of all the hedgies monitored by Insider Monkey, totaling close to $148.1 million in stock. Renaissance Technologies, also sold off its stock, about $43.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks similar to Abbott Laboratories (NYSE:ABT). These stocks are AT&T Inc. (NYSE:T), Novartis AG (NYSE:NVS), PepsiCo, Inc. (NASDAQ:PEP), Chevron Corporation (NYSE:CVX), AbbVie Inc (NYSE:ABBV), Thermo Fisher Scientific Inc. (NYSE:TMO), and Merck & Co., Inc. (NYSE:MRK). All of these stocks’ market caps are closest to ABT’s market cap.

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As you can see these stocks had an average of 64.9 hedge funds with bullish positions and the average amount invested in these stocks was $4600 million. That figure was $4368 million in ABT’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 bullish hedge fund positions. Abbott Laboratories (NYSE:ABT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ABT is 58.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. A small number of hedge funds were also right about betting on ABT as the stock returned 12% since the end of the second quarter (through 10/29) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.