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Hedge Funds Are Souring On DENTSPLY SIRONA Inc. (XRAY)

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about DENTSPLY SIRONA Inc. (NASDAQ:XRAY) in this article.

DENTSPLY SIRONA Inc. (NASDAQ:XRAY) was in 26 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 33. XRAY investors should be aware of a decrease in activity from the world's largest hedge funds of late. There were 28 hedge funds in our database with XRAY positions at the end of the fourth quarter. Our calculations also showed that XRAY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most stock holders, hedge funds are seen as underperforming, outdated financial tools of the past. While there are more than 8000 funds trading today, We look at the moguls of this group, about 850 funds. These hedge fund managers command the lion's share of the hedge fund industry's total capital, and by watching their unrivaled equity investments, Insider Monkey has revealed several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

David Blood
David Blood

David Blood of Generation Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Keeping this in mind let's go over the key hedge fund action regarding DENTSPLY SIRONA Inc. (NASDAQ:XRAY).

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

Heading into the second quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards XRAY over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Generation Investment Management, managed by David Blood and Al Gore, holds the biggest position in DENTSPLY SIRONA Inc. (NASDAQ:XRAY). Generation Investment Management has a $909.9 million position in the stock, comprising 3.8% of its 13F portfolio. Coming in second is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $77.2 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish consist of Brandon Haley's Holocene Advisors, Renaissance Technologies and Anand Parekh's Alyeska Investment Group. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to DENTSPLY SIRONA Inc. (NASDAQ:XRAY), around 3.81% of its 13F portfolio. 0 is also relatively very bullish on the stock, earmarking 0.74 percent of its 13F equity portfolio to XRAY.

Judging by the fact that DENTSPLY SIRONA Inc. (NASDAQ:XRAY) has faced declining sentiment from the smart money, it's easy to see that there lies a certain "tier" of hedgies that decided to sell off their entire stakes by the end of the first quarter. It's worth mentioning that Gabriel Plotkin's Melvin Capital Management dumped the biggest stake of the 750 funds followed by Insider Monkey, comprising about $115.2 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund said goodbye to about $2.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds by the end of the first quarter.

Let's also examine hedge fund activity in other stocks similar to DENTSPLY SIRONA Inc. (NASDAQ:XRAY). We will take a look at Sociedad Química y Minera de Chile S.A. (NYSE:SQM), Howmet Aerospace Inc. (NYSE:HWM), Elanco Animal Health Incorporated (NYSE:ELAN), Pool Corporation (NASDAQ:POOL), PulteGroup, Inc. (NYSE:PHM), The J.M. Smucker Company (NYSE:SJM), and Whirlpool Corporation (NYSE:WHR). All of these stocks' market caps are closest to XRAY's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SQM,16,142465,2 HWM,51,3959776,2 ELAN,42,1710158,-1 POOL,41,1014649,8 PHM,42,1050252,2 SJM,33,689844,-1 WHR,28,1255044,-4 Average,36.1,1403170,1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $1403 million. That figure was $1219 million in XRAY's case. Howmet Aerospace Inc. (NYSE:HWM) is the most popular stock in this table. On the other hand Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is the least popular one with only 16 bullish hedge fund positions. DENTSPLY SIRONA Inc. (NASDAQ:XRAY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XRAY is 40.9. 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 negative signal and 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately XRAY wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); XRAY investors were disappointed as the stock returned -2% since the end of March (through 7/9) 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 most of these stocks already outperformed the market in 2021.

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