Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Henry Schein, Inc. (NASDAQ:HSIC) based on that data.
Henry Schein, Inc. (NASDAQ:HSIC) was in 24 hedge funds' portfolios at the end of the second quarter of 2019. HSIC investors should be aware of an increase in hedge fund interest lately. There were 22 hedge funds in our database with HSIC holdings at the end of the previous quarter. Our calculations also showed that HSIC isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 our short portfolio.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the recent hedge fund action surrounding Henry Schein, Inc. (NASDAQ:HSIC).
How are hedge funds trading Henry Schein, Inc. (NASDAQ:HSIC)?
Heading into the third quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in HSIC a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Generation Investment Management held the most valuable stake in Henry Schein, Inc. (NASDAQ:HSIC), which was worth $727.7 million at the end of the second quarter. On the second spot was Select Equity Group which amassed $537.9 million worth of shares. Moreover, AQR Capital Management, Renaissance Technologies, and GAMCO Investors were also bullish on Henry Schein, Inc. (NASDAQ:HSIC), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key money managers have jumped into Henry Schein, Inc. (NASDAQ:HSIC) headfirst. Carlson Capital, managed by Clint Carlson, created the most valuable position in Henry Schein, Inc. (NASDAQ:HSIC). Carlson Capital had $16.5 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also made a $2.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Tewksbury's Stevens Capital Management, Matthew Hulsizer's PEAK6 Capital Management, and Michael Gelband's ExodusPoint Capital.
Let's now review hedge fund activity in other stocks similar to Henry Schein, Inc. (NASDAQ:HSIC). These stocks are Autohome Inc (NYSE:ATHM), CF Industries Holdings, Inc. (NYSE:CF), Everest Re Group Ltd (NYSE:RE), and Avery Dennison Corporation (NYSE:AVY). This group of stocks' market caps match HSIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATHM,16,1113833,0 CF,35,954259,3 RE,23,625474,4 AVY,21,242510,-2 Average,23.75,734019,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $734 million. That figure was $1558 million in HSIC's case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand Autohome Inc (NYSE:ATHM) is the least popular one with only 16 bullish hedge fund positions. Henry Schein, Inc. (NASDAQ:HSIC) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HSIC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HSIC were disappointed as the stock returned -9.2% during the third quarter 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.
Disclosure: None. This article was originally published at Insider Monkey.