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. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Bio-Rad Laboratories, Inc. (NYSE:BIO) and determine whether the smart money was really smart about this stock.
Is Bio-Rad Laboratories, Inc. (NYSE:BIO) a buy here? Hedge funds were becoming more confident. The number of bullish hedge fund positions advanced by 15 lately. Bio-Rad Laboratories, Inc. (NYSE:BIO) was in 54 hedge funds' portfolios at the end of June. The all time high for this statistics is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BIO isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 56 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Steven Cohen of Point72 Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let's take a look at the key 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 second quarter, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the first quarter of 2020. By comparison, 36 hedge funds held shares or bullish call options in BIO a year ago. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Bio-Rad Laboratories, Inc. (NYSE:BIO), with a stake worth $154.9 million reported as of the end of September. Trailing AQR Capital Management was GQG Partners, which amassed a stake valued at $133.4 million. Marshall Wace LLP, Fisher Asset 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 Tower House Partners allocated the biggest weight to Bio-Rad Laboratories, Inc. (NYSE:BIO), around 18.56% of its 13F portfolio. Intermede Investment Partners is also relatively very bullish on the stock, dishing out 3.9 percent of its 13F equity portfolio to BIO.
Now, some big names have been driving this bullishness. GQG Partners, managed by Rajiv Jain, assembled the most outsized position in Bio-Rad Laboratories, Inc. (NYSE:BIO). GQG Partners had $133.4 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $12.2 million investment in the stock during the quarter. The other funds with brand new BIO positions are Steve Cohen's Point72 Asset Management, Donald Sussman's Paloma Partners, and Leonard Green's Leonard Green & Partners.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Bio-Rad Laboratories, Inc. (NYSE:BIO) but similarly valued. These stocks are Vipshop Holdings Limited (NYSE:VIPS), Altice USA, Inc. (NYSE:ATUS), M&T Bank Corporation (NYSE:MTB), Sun Communities Inc (NYSE:SUI), Magna International Inc. (NYSE:MGA), Leidos Holdings Inc (NYSE:LDOS), and Wix.Com Ltd (NASDAQ:WIX). All of these 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 VIPS,28,440769,-2 ATUS,57,2576910,10 MTB,30,658440,9 SUI,30,436381,2 MGA,19,467472,-3 LDOS,35,617234,5 WIX,27,1258178,-2 Average,32.3,922198,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $922 million. That figure was $1129 million in BIO's case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 19 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 86.1. 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 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 28.2% in 2020 through August 24th but still beat the market by 20.6 percentage points. Hedge funds were also right about betting on BIO, though not to the same extent, as the stock returned 13.2% since the end of June and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.