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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Henry Schein, Inc. (NASDAQ:HSIC).
Is HSIC stock a buy? The smart money was turning less bullish. The number of bullish hedge fund bets went down by 7 recently. Henry Schein, Inc. (NASDAQ:HSIC) was in 33 hedge funds' portfolios at the end of the fourth quarter of 2020. 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 Q4 rankings). There were 40 hedge funds in our database with HSIC holdings at the end of September.
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 S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
David Blood of Generation Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Now let's view the new hedge fund action encompassing Henry Schein, Inc. (NASDAQ:HSIC).
Do Hedge Funds Think HSIC Is A Good Stock To Buy Now?
At Q4's end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. On the other hand, there were a total of 36 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.
The largest stake in Henry Schein, Inc. (NASDAQ:HSIC) was held by Generation Investment Management, which reported holding $894.5 million worth of stock at the end of December. It was followed by AQR Capital Management with a $79.7 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and Partner Fund 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 3.99% of its 13F portfolio. Partner Fund Management is also relatively very bullish on the stock, earmarking 0.98 percent of its 13F equity portfolio to HSIC.
Since Henry Schein, Inc. (NASDAQ:HSIC) has experienced falling interest from the smart money, it's safe to say that there lies a certain "tier" of hedge funds who were dropping their positions entirely heading into Q1. Intriguingly, Peter S. Park's Park West Asset Management cut the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling about $25.5 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund dumped about $2.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 7 funds heading into Q1.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Henry Schein, Inc. (NASDAQ:HSIC) but similarly valued. These stocks are GFL Environmental Inc. (NYSE:GFL), MGM Growth Properties LLC (NYSE:MGP), Kingsoft Cloud Holdings Limited (NASDAQ:KC), American Homes 4 Rent (NYSE:AMH), Magellan Midstream Partners, L.P. (NYSE:MMP), BorgWarner Inc. (NYSE:BWA), and Tenaris S.A. (NYSE:TS). This group of stocks' market values resemble HSIC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GFL,18,448705,-2 MGP,29,524525,-1 KC,20,189726,-9 AMH,27,503512,3 MMP,22,146290,2 BWA,27,644895,-3 TS,12,261571,0 Average,22.1,388461,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $1225 million in HSIC's case. MGM Growth Properties LLC (NYSE:MGP) is the most popular stock in this table. On the other hand Tenaris S.A. (NYSE:TS) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Henry Schein, Inc. (NASDAQ:HSIC) is more popular among hedge funds. Our overall hedge fund sentiment score for HSIC is 72.8. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately HSIC wasn't nearly as popular as these 30 stocks and hedge funds that were betting on HSIC were disappointed as the stock returned 2.7% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.