Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 8 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Bio-Techne Corporation (NASDAQ:TECH).
Is Bio-Techne Corporation (NASDAQ:TECH) a buy right now? Investors who are in the know are becoming more confident. The number of bullish hedge fund positions improved by 1 in recent months. Our calculations also showed that tech isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the key hedge fund action regarding Bio-Techne Corporation (NASDAQ:TECH).
How are hedge funds trading Bio-Techne Corporation (NASDAQ:TECH)?
At Q1's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in TECH a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Bio-Techne Corporation (NASDAQ:TECH), which was worth $97.4 million at the end of the first quarter. On the second spot was 12 West Capital Management which amassed $70.7 million worth of shares. Moreover, Royce & Associates, Millennium Management, and AQR Capital Management were also bullish on Bio-Techne Corporation (NASDAQ:TECH), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were breaking ground themselves. Hudson Bay Capital Management, managed by Sander Gerber, established the biggest position in Bio-Techne Corporation (NASDAQ:TECH). Hudson Bay Capital Management had $10 million invested in the company at the end of the quarter. Andrew Sandler's Sandler Capital Management also initiated a $8.1 million position during the quarter. The other funds with brand new TECH positions are Anand Parekh's Alyeska Investment Group, Michael Gelband's ExodusPoint Capital, and Bruce Kovner's Caxton Associates LP.
Let's also examine hedge fund activity in other stocks similar to Bio-Techne Corporation (NASDAQ:TECH). We will take a look at Bunge Limited (NYSE:BG), Apartment Investment and Management Co. (NYSE:AIV), Gildan Activewear Inc (NYSE:GIL), and Store Capital Corporation (NYSE:STOR). This group of stocks' market valuations are closest to TECH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BG,35,687417,-3 AIV,21,628055,0 GIL,27,562233,2 STOR,22,1022248,-2 Average,26.25,724988,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $725 million. That figure was $381 million in TECH's case. Bunge Limited (NYSE:BG) is the most popular stock in this table. On the other hand Apartment Investment and Management Co. (NYSE:AIV) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Bio-Techne Corporation (NASDAQ:TECH) is even less popular than AIV. Hedge funds dodged a bullet by taking a bearish stance towards TECH. Our calculations showed that the top 15 most popular hedge fund stocks returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately TECH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TECH investors were disappointed as the stock returned -1.7% during the same time frame 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 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.