Was The Smart Money Right About Thermo Fisher Scientific Inc. (TMO)?

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Thermo Fisher Scientific Inc. (NYSE:TMO) based on that data.

Thermo Fisher Scientific Inc. (NYSE:TMO) was in 87 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 89. TMO investors should be aware of an increase in hedge fund sentiment recently. There were 79 hedge funds in our database with TMO holdings at the end of March. Our calculations also showed that TMO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Blood of Generation Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. 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 let’s analyze the new hedge fund action encompassing Thermo Fisher Scientific Inc. (NYSE:TMO).

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

At Q2’s end, a total of 87 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. By comparison, 73 hedge funds held shares or bullish call options in TMO a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

The largest stake in Thermo Fisher Scientific Inc. (NYSE:TMO) was held by Fisher Asset Management, which reported holding $971.8 million worth of stock at the end of June. It was followed by Generation Investment Management with a $860.9 million position. Other investors bullish on the company included Farallon Capital, AQR Capital Management, and Viking Global. In terms of the portfolio weights assigned to each position Cryder Capital allocated the biggest weight to Thermo Fisher Scientific Inc. (NYSE:TMO), around 10.05% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, setting aside 8.47 percent of its 13F equity portfolio to TMO.

As industrywide interest jumped, key money managers have been driving this bullishness. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, established the biggest position in Thermo Fisher Scientific Inc. (NYSE:TMO). Healthcor Management LP had $92.3 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also initiated a $29.4 million position during the quarter. The other funds with new positions in the stock are Christopher James’s Partner Fund Management, Vishal Saluja and Pham Quang’s Endurant Capital Management, and Leonard Green’s Leonard Green & Partners.

Let’s check out hedge fund activity in other stocks similar to Thermo Fisher Scientific Inc. (NYSE:TMO). These stocks are Merck & Co., Inc. (NYSE:MRK), Broadcom Inc (NASDAQ:AVGO), Novo Nordisk A/S (NYSE:NVO), Danaher Corporation (NYSE:DHR), Wells Fargo & Company (NYSE:WFC), Accenture Plc (NYSE:ACN), and BHP Group (NYSE:BHP). This group of stocks’ market values match TMO’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 55.4 hedge funds with bullish positions and the average amount invested in these stocks was $4185 million. That figure was $7391 million in TMO’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 18 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 84.7. 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. Hedge funds were also right about betting on TMO as the stock returned 25.6% since the end of Q2 (through 10/29) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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