Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Danaher Corporation (NYSE:DHR).
Is Danaher Corporation (NYSE:DHR) a good investment now? Investors who are in the know are in a bullish mood. The number of long hedge fund bets advanced by 2 in recent months. Our calculations also showed that DHR 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). DHR was in 63 hedge funds' portfolios at the end of the first quarter of 2020. There were 61 hedge funds in our database with DHR positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 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_745223" align="aligncenter" width="400"] Daniel Sundheim of D1 Capital Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. 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 we're going to check out the key hedge fund action encompassing Danaher Corporation (NYSE:DHR).
What does smart money think about Danaher Corporation (NYSE:DHR)?
At the end of the first quarter, a total of 63 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in DHR over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, D1 Capital Partners was the largest shareholder of Danaher Corporation (NYSE:DHR), with a stake worth $537.2 million reported as of the end of September. Trailing D1 Capital Partners was Third Point, which amassed a stake valued at $494.1 million. Citadel Investment Group, Fisher Asset Management, and Akre 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 Eversept Partners allocated the biggest weight to Danaher Corporation (NYSE:DHR), around 8.21% of its 13F portfolio. Third Point is also relatively very bullish on the stock, designating 7.89 percent of its 13F equity portfolio to DHR.
As aggregate interest increased, specific money managers have been driving this bullishness. D1 Capital Partners, managed by Daniel Sundheim, created the largest position in Danaher Corporation (NYSE:DHR). D1 Capital Partners had $537.2 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $132.8 million position during the quarter. The other funds with new positions in the stock are Brandon Haley's Holocene Advisors, Alexander Mitchell's Scopus Asset Management, and D. E. Shaw's D E Shaw.
Let's go over hedge fund activity in other stocks similar to Danaher Corporation (NYSE:DHR). We will take a look at American Tower Corporation (NYSE:AMT), TOTAL S.A. (NYSE:TOT), Lockheed Martin Corporation (NYSE:LMT), and GlaxoSmithKline plc (NYSE:GSK). This group of stocks' market values match DHR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMT,57,3819731,11 TOT,12,836773,-5 LMT,55,1505572,8 GSK,27,1953128,1 Average,37.75,2028801,3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.75 hedge funds with bullish positions and the average amount invested in these stocks was $2029 million. That figure was $3194 million in DHR's case. American Tower Corporation (NYSE:AMT) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Danaher Corporation (NYSE:DHR) is more popular among hedge funds. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. Unfortunately DHR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on DHR were disappointed as the stock returned 14.3% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.