Were Hedge Funds Illusioned With Hologic, Inc. (HOLX)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Hologic, Inc. (NASDAQ:HOLX) based on that data and determine whether they were really smart about the stock.

Hologic, Inc. (NASDAQ:HOLX) has seen a decrease in support from the world’s most elite money managers of late. Hologic, Inc. (NASDAQ:HOLX) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that HOLX 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. Keeping this in mind let’s take a glance at the new hedge fund action surrounding Hologic, Inc. (NASDAQ:HOLX).

Lee Ainslie of Maverick Capital

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

At Q3’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HOLX over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

More specifically, Millennium Management was the largest shareholder of Hologic, Inc. (NASDAQ:HOLX), with a stake worth $115.6 million reported as of the end of September. Trailing Millennium Management was AQR Capital Management, which amassed a stake valued at $94.1 million. Arrowstreet Capital, Balyasny Asset Management, and Glenview Capital 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 Iron Triangle Partners allocated the biggest weight to Hologic, Inc. (NASDAQ:HOLX), around 6.36% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, dishing out 3.36 percent of its 13F equity portfolio to HOLX.

Due to the fact that Hologic, Inc. (NASDAQ:HOLX) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that slashed their entire stakes by the end of the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group said goodbye to the largest investment of the 750 funds tracked by Insider Monkey, valued at an estimated $149.2 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also sold off its stock, about $75.7 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hologic, Inc. (NASDAQ:HOLX) but similarly valued. We will take a look at Ubiquiti Inc. (NYSE:UI), Seagate Technology Holdings plc (NASDAQ:STX), Hewlett Packard Enterprise Company (NYSE:HPE), Qorvo Inc (NASDAQ:QRVO), Cincinnati Financial Corporation (NASDAQ:CINF), Ally Financial Inc (NYSE:ALLY), and Duke Realty Corporation (NYSE:DRE). This group of stocks’ market caps resemble HOLX’s market cap.

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As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $1178 million. That figure was $717 million in HOLX’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 13 bullish hedge fund positions. Hologic, Inc. (NASDAQ:HOLX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOLX is 55.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 3.6 percentage points. Unfortunately, HOLX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HOLX were disappointed as the stock returned -4.8% since the end of September (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.

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