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Hedge Funds Are Selling Henry Schein, Inc. (HSIC)

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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. We at Insider Monkey have plowed through 866 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 March 31st. In this article we look at what those investors think of Henry Schein, Inc. (NASDAQ:HSIC).

Henry Schein, Inc. (NASDAQ:HSIC) has experienced a decrease in enthusiasm from smart money lately. Henry Schein, Inc. (NASDAQ:HSIC) was in 32 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that HSIC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Justin John Ferayorni - Tamarack Capital Management
Justin John Ferayorni - Tamarack Capital Management

Justin John Ferayorni of Tamarack Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks 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. With all of this in mind we're going to review the latest hedge fund action encompassing Henry Schein, Inc. (NASDAQ:HSIC).

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

At Q1's end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HSIC over the last 23 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

The largest stake in Henry Schein, Inc. (NASDAQ:HSIC) was held by Generation Investment Management, which reported holding $924.3 million worth of stock at the end of December. It was followed by D E Shaw with a $82 million position. Other investors bullish on the company included AQR Capital Management, Renaissance Technologies, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to Henry Schein, Inc. (NASDAQ:HSIC), around 3.87% of its 13F portfolio. Tamarack Capital Management is also relatively very bullish on the stock, designating 1.56 percent of its 13F equity portfolio to HSIC.

Seeing as Henry Schein, Inc. (NASDAQ:HSIC) has experienced falling interest from hedge fund managers, it's safe to say that there were a few hedgies who sold off their entire stakes by the end of the first quarter. Intriguingly, Christopher James's Partner Fund Management sold off the largest stake of the "upper crust" of funds monitored by Insider Monkey, valued at about $26.4 million in stock. Jeffrey Bronchick's fund, Cove Street Capital, also said goodbye to its stock, about $5.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Henry Schein, Inc. (NASDAQ:HSIC) but similarly valued. We will take a look at Penumbra Inc (NYSE:PEN), American Financial Group, Inc. (NYSE:AFG), MGM Growth Properties LLC (NYSE:MGP), Aspen Technology, Inc. (NASDAQ:AZPN), Paylocity Holding Corp (NASDAQ:PCTY), Paysafe Limited (NYSE:PSFE), and Western Alliance Bancorporation (NYSE:WAL). All of these 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 PEN,27,399617,7 AFG,21,191538,-3 MGP,34,592102,5 AZPN,32,1158081,3 PCTY,22,539146,-4 PSFE,41,1326259,41 WAL,23,141015,1 Average,28.6,621108,7.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $621 million. That figure was $1262 million in HSIC's case. Paysafe Limited (NYSE:PSFE) is the most popular stock in this table. On the other hand American Financial Group, Inc. (NYSE:AFG) is the least popular one with only 21 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. Our overall hedge fund sentiment score for HSIC is 55.5. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately HSIC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on HSIC were disappointed as the stock returned 9.7% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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