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Abbott Laboratories (ABT) vs. Hedge Fund Favorites in 2019

Abigail Fisher

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Abbott Laboratories (NYSE:ABT) and compare its performance to hedge funds' consensus picks in 2019.

Abbott Laboratories (NYSE:ABT) investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that ABT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

If you'd ask most stock holders, hedge funds are seen as underperforming, old investment vehicles of years past. While there are greater than 8000 funds in operation at present, Our researchers look at the upper echelon of this group, approximately 750 funds. It is estimated that this group of investors administer the majority of all hedge funds' total asset base, and by keeping track of their top investments, Insider Monkey has figured out various investment strategies that have historically beaten the broader indices. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_364887" align="aligncenter" width="488"] Kris Jenner of Rock Springs Capital Management[/caption]

Kris Jenner - Rock Springs Capital

We leave no stone unturned when looking for the next great investment idea. For example one of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. Keeping this in mind let's view the new hedge fund action regarding Abbott Laboratories (NYSE:ABT).

Hedge fund activity in Abbott Laboratories (NYSE:ABT)

At Q3's end, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the second quarter of 2019. By comparison, 53 hedge funds held shares or bullish call options in ABT a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Among these funds, GQG Partners held the most valuable stake in Abbott Laboratories (NYSE:ABT), which was worth $577.5 million at the end of the third quarter. On the second spot was Diamond Hill Capital which amassed $536.5 million worth of shares. Adage Capital Management, AQR Capital Management, and Sirios 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 GQG Partners allocated the biggest weight to Abbott Laboratories (NYSE:ABT), around 5.87% of its 13F portfolio. Sirios Capital Management is also relatively very bullish on the stock, earmarking 5.39 percent of its 13F equity portfolio to ABT.

With a general bullishness amongst the heavyweights, some big names have jumped into Abbott Laboratories (NYSE:ABT) headfirst. Millennium Management, managed by Israel Englander, assembled the largest position in Abbott Laboratories (NYSE:ABT). Millennium Management had $23 million invested in the company at the end of the quarter. Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management also initiated a $10.3 million position during the quarter. The following funds were also among the new ABT investors: Benjamin A. Smith's Laurion Capital Management, Matthew Tewksbury's Stevens Capital Management, and Lee Ainslie's Maverick Capital.

Let's go over hedge fund activity in other stocks similar to Abbott Laboratories (NYSE:ABT). These stocks are NIKE, Inc. (NYSE:NKE), Medtronic, plc (NYSE:MDT), SAP SE (NYSE:SAP), and TOTAL S.A. (NYSE:TOT). This group of stocks' market values match ABT's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NKE,63,2304473,12 MDT,50,2120499,1 SAP,18,1578895,1 TOT,17,1094583,4 Average,37,1774613,4.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1775 million. That figure was $2063 million in ABT's case. NIKE, Inc. (NYSE:NKE) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 17 bullish hedge fund positions. Abbott Laboratories (NYSE:ABT) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately ABT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ABT were disappointed as the stock returned 22.8% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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