We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Danaher Corporation (NYSE:DHR) and determine whether hedge funds skillfully traded this stock.
Danaher Corporation (NYSE:DHR) has seen a decrease in activity from the world’s largest hedge funds in recent months. Danaher Corporation (NYSE:DHR) was in 74 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 81. Our calculations also showed that DHR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to take a gander at the fresh hedge fund action surrounding Danaher Corporation (NYSE:DHR).
Daniel Sundheim of D1 Capital
Do Hedge Funds Think DHR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 74 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 75 hedge funds with a bullish position in DHR a year ago. So, let’s examine 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 Danaher Corporation (NYSE:DHR), with a stake worth $1049.2 million reported as of the end of September. Trailing Fisher Asset Management was Third Point, which amassed a stake valued at $872.2 million. D1 Capital Partners, Akre Capital Management, and Impax Asset 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 Intermede Investment Partners allocated the biggest weight to Danaher Corporation (NYSE:DHR), around 6.43% of its 13F portfolio. Third Point is also relatively very bullish on the stock, earmarking 4.76 percent of its 13F equity portfolio to DHR.
Due to the fact that Danaher Corporation (NYSE:DHR) has faced declining sentiment from hedge fund managers, it’s safe to say that there were a few money managers that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Renaissance Technologies cut the biggest position of the “upper crust” of funds tracked by Insider Monkey, totaling close to $132.7 million in stock. Arthur B Cohen and Joseph Healey’s fund, Healthcor Management LP, also dumped its stock, about $103.3 million worth. These transactions are important to note, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Danaher Corporation (NYSE:DHR) but similarly valued. These stocks are Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), PepsiCo, Inc. (NASDAQ:PEP), Accenture Plc (NYSE:ACN), Broadcom Inc (NASDAQ:AVGO), Costco Wholesale Corporation (NASDAQ:COST), and Chevron Corporation (NYSE:CVX). This group of stocks’ market values are similar to DHR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INTC | 66 | 6472854 | -12 |
| ABT | 63 | 3611527 | 2 |
| PEP | 61 | 4435441 | -5 |
| ACN | 56 | 4460650 | 4 |
| AVGO | 50 | 2706386 | 3 |
| COST | 55 | 4393346 | 1 |
| CVX | 51 | 4442202 | 1 |
| Average | 57.4 | 4360344 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 57.4 hedge funds with bullish positions and the average amount invested in these stocks was $4360 million. That figure was $6947 million in DHR’s case. Intel Corporation (NASDAQ:INTC) is the most popular stock in this table. On the other hand Broadcom Inc (NASDAQ:AVGO) is the least popular one with only 50 bullish hedge fund positions. Compared to these stocks Danaher Corporation (NYSE:DHR) is more popular among hedge funds. Our overall hedge fund sentiment score for DHR is 78.4. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, DHR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DHR were disappointed as the stock returned -6.1% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Danaher Corp (NYSE:DHR)
Follow Danaher Corp (NYSE:DHR)
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Disclosure: None. This article was originally published at Insider Monkey.
