World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Alcon Inc. (NYSE:ALC) worth your attention right now? Hedge funds are becoming hopeful. The number of long hedge fund positions inched up by 18 in recent months. Our calculations also showed that ALC isn't among the 30 most popular stocks among hedge funds (see the video below). ALC was in 18 hedge funds' portfolios at the end of the second quarter of 2019. There were 0 hedge funds in our database with ALC positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are plenty of methods market participants have at their disposal to grade stocks. Some of the most innovative methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outclass the market by a very impressive amount (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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. Let's go over the fresh hedge fund action encompassing Alcon Inc. (NYSE:ALC).
How have hedgies been trading Alcon Inc. (NYSE:ALC)?
Heading into the third quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18 from the first quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in ALC a year ago. So, let's see 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, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Alcon Inc. (NYSE:ALC). Fisher Asset Management has a $84.4 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Bridger Management, managed by Roberto Mignone, which holds a $74.5 million position; 5.8% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, John Brennan's Sirios Capital Management and Jeffrey Gates's Gates Capital Management.
Now, some big names have jumped into Alcon Inc. (NYSE:ALC) headfirst. Fisher Asset Management, managed by Ken Fisher, assembled the most outsized position in Alcon Inc. (NYSE:ALC). Fisher Asset Management had $84.4 million invested in the company at the end of the quarter. Roberto Mignone's Bridger Management also initiated a $74.5 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, John Brennan's Sirios Capital Management, and Jeffrey Gates's Gates Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Alcon Inc. (NYSE:ALC) but similarly valued. We will take a look at Electronic Arts Inc. (NASDAQ:EA), Ingersoll-Rand Plc (NYSE:IR), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), and Paychex, Inc. (NASDAQ:PAYX). All of these stocks' market caps resemble ALC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EA,59,2605780,-2 IR,40,2101164,1 ALXN,44,2636589,9 PAYX,34,862198,13 Average,44.25,2051433,5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.25 hedge funds with bullish positions and the average amount invested in these stocks was $2051 million. That figure was $454 million in ALC's case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand Paychex, Inc. (NASDAQ:PAYX) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks Alcon Inc. (NYSE:ALC) is even less popular than PAYX. Hedge funds dodged a bullet by taking a bearish stance towards ALC. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ALC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ALC investors were disappointed as the stock returned -6.1% 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.