At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Bio-Rad Laboratories, Inc. (NYSE:BIO).
Bio-Rad Laboratories, Inc. (NYSE:BIO) was in 39 hedge funds' portfolios at the end of the first quarter of 2020. BIO has experienced a decrease in hedge fund sentiment in recent months. There were 44 hedge funds in our database with BIO positions at the end of the previous quarter. Our calculations also showed that BIO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_339612" align="aligncenter" width="392"] Kerr Neilson of Platinum Asset Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's go over the new hedge fund action surrounding Bio-Rad Laboratories, Inc. (NYSE:BIO).
Hedge fund activity in Bio-Rad Laboratories, Inc. (NYSE:BIO)
At the end of the first quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BIO over the last 18 quarters. With the smart money's capital changing hands, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in Bio-Rad Laboratories, Inc. (NYSE:BIO). AQR Capital Management has a $134.6 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Intermede Investment Partners, led by Barry Dargan, holding a $75.9 million position; 4.5% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism encompass Ken Fisher's Fisher Asset Management, Brian Ashford-Russell and Tim Woolley's Polar Capital and Ross Turner's Pelham Capital. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to Bio-Rad Laboratories, Inc. (NYSE:BIO), around 9.34% of its 13F portfolio. Tamarack Capital Management is also relatively very bullish on the stock, designating 5.31 percent of its 13F equity portfolio to BIO.
Seeing as Bio-Rad Laboratories, Inc. (NYSE:BIO) has witnessed falling interest from the smart money, we can see that there were a few funds who sold off their full holdings by the end of the third quarter. Intriguingly, Paolo Mortarotti's Tower House Partners sold off the largest investment of the 750 funds monitored by Insider Monkey, comprising close to $60.5 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund dumped about $12.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 5 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 Bio-Rad Laboratories, Inc. (NYSE:BIO) but similarly valued. We will take a look at Equity Lifestyle Properties, Inc. (NYSE:ELS), DISH Network Corp. (NASDAQ:DISH), POSCO (NYSE:PKX), and Vipshop Holdings Limited (NYSE:VIPS). This group of stocks' market caps resemble BIO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ELS,31,452058,8 DISH,44,862996,3 PKX,11,40514,1 VIPS,30,553863,3 Average,29,477358,3.75 [/table]
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 $477 million. That figure was $875 million in BIO's case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 11 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 calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on BIO as the stock returned 40.2% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.