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Is Danaher (DHR) Stock A Buy or Sell?

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Debasis Saha
·6 min read
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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2020. What do these smart investors think about Danaher Corporation (NYSE:DHR)?

Is Danaher (DHR) stock a buy or sell? Investors who are in the know were taking a bullish view. The number of long hedge fund bets moved up by 6 lately. Danaher Corporation (NYSE:DHR) was in 81 hedge funds' portfolios at the end of December. The all time high for this statistic was previously 76. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DHR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

At the moment there are a lot of tools market participants can use to size up stocks. Two of the most under-the-radar tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best fund managers can outclass the S&P 500 by a healthy margin (see the details here).

Charles Akre Akre Capital Management
Charles Akre Akre Capital Management

Charles Akre of Akre Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now 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 (or at the end of this article). With all of this in mind let's review the fresh hedge fund action encompassing Danaher Corporation (NYSE:DHR).

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

Heading into the first quarter of 2021, a total of 81 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2020. On the other hand, there were a total of 61 hedge funds with a bullish position in DHR 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.

Is DHR A Good Stock To Buy?
Is DHR A Good Stock To Buy?

Among these funds, Fisher Asset Management held the most valuable stake in Danaher Corporation (NYSE:DHR), which was worth $686.8 million at the end of the fourth quarter. On the second spot was Third Point which amassed $666.4 million worth of shares. D1 Capital Partners, Akre Capital Management, and Millennium 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 Third Point allocated the biggest weight to Danaher Corporation (NYSE:DHR), around 5.14% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, setting aside 4.59 percent of its 13F equity portfolio to DHR.

Now, specific money managers have been driving this bullishness. 11 Capital Partners, managed by Jason McDougall, assembled the largest position in Danaher Corporation (NYSE:DHR). 11 Capital Partners had $14.3 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $13.7 million investment in the stock during the quarter. The following funds were also among the new DHR investors: Dmitry Balyasny's Balyasny Asset Management, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, and Matthew Tewksbury's Stevens Capital Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Danaher Corporation (NYSE:DHR) but similarly valued. These stocks are Medtronic plc (NYSE:MDT), SAP SE (NYSE:SAP), NextEra Energy, Inc. (NYSE:NEE), Texas Instruments Incorporated (NASDAQ:TXN), Honeywell International Inc. (NYSE:HON), United Parcel Service, Inc. (NYSE:UPS), and Union Pacific Corporation (NYSE:UNP). This group of stocks' market values are similar to DHR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MDT,59,2814949,-3 SAP,14,1390775,-2 NEE,61,3078288,-3 TXN,56,2497473,1 HON,45,983560,4 UPS,48,1253721,-9 UNP,68,3539131,-6 Average,50.1,2222557,-2.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 50.1 hedge funds with bullish positions and the average amount invested in these stocks was $2223 million. That figure was $5379 million in DHR's case. Union Pacific Corporation (NYSE:UNP) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Danaher Corporation (NYSE:DHR) is more popular among hedge funds. Our overall hedge fund sentiment score for DHR is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Unfortunately DHR wasn't nearly as popular as these 30 stocks and hedge funds that were betting on DHR were disappointed as the stock returned -3.4% since the end of the fourth quarter (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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