We at Insider Monkey have gone over 866 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 March 31st. In this article, we look at what those funds think of Thermo Fisher Scientific Inc. (NYSE:TMO) based on that data.
Is Thermo Fisher Scientific Inc. (NYSE:TMO) worth your attention right now? Hedge funds were in a pessimistic mood. The number of long hedge fund positions went down by 10 recently. Thermo Fisher Scientific Inc. (NYSE:TMO) was in 79 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 89. Our calculations also showed that TMO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
William Von Mueffling of Cantillon Capital Management
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Do Hedge Funds Think TMO Is A Good Stock To Buy Now?
At the end of March, a total of 79 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. By comparison, 80 hedge funds held shares or bullish call options in TMO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Thermo Fisher Scientific Inc. (NYSE:TMO), which was worth $827.9 million at the end of the fourth quarter. On the second spot was Farallon Capital which amassed $527.2 million worth of shares. AQR Capital Management, Generation Investment Management, and Cantillon Capital 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 Cryder Capital allocated the biggest weight to Thermo Fisher Scientific Inc. (NYSE:TMO), around 9.74% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, setting aside 9.04 percent of its 13F equity portfolio to TMO.
Seeing as Thermo Fisher Scientific Inc. (NYSE:TMO) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few money managers that slashed their full holdings last quarter. Interestingly, Robert Pohly’s Samlyn Capital said goodbye to the biggest investment of all the hedgies tracked by Insider Monkey, valued at close to $60.5 million in stock. Brian Ashford-Russell and Tim Woolley’s fund, Polar Capital, also dropped its stock, about $8.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 10 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Thermo Fisher Scientific Inc. (NYSE:TMO) but similarly valued. These stocks are Eli Lilly and Company (NYSE:LLY), Texas Instruments Incorporated (NASDAQ:TXN), BHP Group (NYSE:BHP), McDonald’s Corporation (NYSE:MCD), Pinduoduo Inc. (NASDAQ:PDD), Wells Fargo & Company (NYSE:WFC), and Danaher Corporation (NYSE:DHR). This group of stocks’ market caps match TMO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LLY | 55 | 2522416 | 5 |
| TXN | 42 | 2532768 | -14 |
| BHP | 18 | 873686 | -2 |
| MCD | 67 | 3783829 | 5 |
| PDD | 56 | 6293871 | 2 |
| WFC | 96 | 7454581 | -3 |
| DHR | 81 | 5796963 | 0 |
| Average | 59.3 | 4179731 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 59.3 hedge funds with bullish positions and the average amount invested in these stocks was $4180 million. That figure was $6254 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 60.7. 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 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on TMO, though not to the same extent, as the stock returned 18% since Q1 (through August 6th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
