Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Bio-Rad Laboratories, Inc. (NYSE:BIO) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Bio-Rad Laboratories, Inc. (NYSE:BIO) a bargain? The smart money was selling. The number of bullish hedge fund positions went down by 3 lately. Bio-Rad Laboratories, Inc. (NYSE:BIO) was in 38 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 54. Our calculations also showed that BIO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 41 hedge funds in our database with BIO holdings at the end of June.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
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. Now we’re going to review the new hedge fund action surrounding Bio-Rad Laboratories, Inc. (NYSE:BIO).
Do Hedge Funds Think BIO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. By comparison, 48 hedge funds held shares or bullish call options in BIO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Bio-Rad Laboratories, Inc. (NYSE:BIO) was held by Marshall Wace LLP, which reported holding $327.7 million worth of stock at the end of September. It was followed by Intermede Investment Partners with a $164.2 million position. Other investors bullish on the company included Schonfeld Strategic Advisors, AQR Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Tower House Partners allocated the biggest weight to Bio-Rad Laboratories, Inc. (NYSE:BIO), around 18.06% of its 13F portfolio. Intermede Investment Partners is also relatively very bullish on the stock, earmarking 3.78 percent of its 13F equity portfolio to BIO.
Since Bio-Rad Laboratories, Inc. (NYSE:BIO) has faced a decline in interest from the smart money, it’s safe to say that there is a sect of fund managers that elected to cut their positions entirely last quarter. At the top of the heap, Jonathan Auerbach’s Hound Partners said goodbye to the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $46.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $32.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Bio-Rad Laboratories, Inc. (NYSE:BIO). These stocks are Qualtrics International Inc. (NASDAQ:XM), Warner Music Group Corp. (NASDAQ:WMG), Waters Corporation (NYSE:WAT), PerkinElmer, Inc. (NYSE:PKI), International Paper Company (NYSE:IP), Kellogg Company (NYSE:K), and KE Holdings Inc (NYSE:BEKE). This group of stocks’ market values resemble BIO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XM | 26 | 1694438 | -11 |
| WMG | 28 | 972824 | -1 |
| WAT | 40 | 2673486 | 0 |
| PKI | 31 | 1920736 | -1 |
| IP | 30 | 263108 | -1 |
| K | 22 | 290019 | -10 |
| BEKE | 26 | 1740683 | -5 |
| Average | 29 | 1365042 | -4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1365 million. That figure was $1442 million in BIO’s case. Waters Corporation (NYSE:WAT) is the most popular stock in this table. On the other hand Kellogg Company (NYSE:K) is the least popular one with only 22 bullish hedge fund positions. Bio-Rad Laboratories, Inc. (NYSE:BIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BIO is 67.6. 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, BIO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BIO were disappointed as the stock returned -19.6% 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.
Follow Bio-Rad Laboratories Inc. (NYSE:BIO BIOB)
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Disclosure: None. This article was originally published at Insider Monkey.
