We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Meridian Bioscience, Inc. (NASDAQ:VIVO).
Meridian Bioscience, Inc. (NASDAQ:VIVO) shareholders have witnessed a decrease in hedge fund sentiment lately. Our calculations also showed that VIVO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are several signals investors have at their disposal to value their holdings. A duo of the most underrated signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top fund managers can outperform the market by a healthy margin (see the details here).
[caption id="attachment_746893" align="aligncenter" width="1613"] Paul Marshall of Marshall Wace[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's review the key hedge fund action encompassing Meridian Bioscience, Inc. (NASDAQ:VIVO).
How have hedgies been trading Meridian Bioscience, Inc. (NASDAQ:VIVO)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in VIVO over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Meridian Bioscience, Inc. (NASDAQ:VIVO), with a stake worth $31.1 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $6.1 million. Marshall Wace, Arrowstreet Capital, and GAMCO Investors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Meridian Bioscience, Inc. (NASDAQ:VIVO), around 0.26% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to VIVO.
Seeing as Meridian Bioscience, Inc. (NASDAQ:VIVO) has faced falling interest from hedge fund managers, logic holds that there exists a select few hedge funds who sold off their positions entirely by the end of the third quarter. Intriguingly, Donald Sussman's Paloma Partners sold off the biggest position of the 750 funds monitored by Insider Monkey, worth about $0.5 million in stock. Minhua Zhang's fund, Weld Capital Management, also cut its stock, about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Meridian Bioscience, Inc. (NASDAQ:VIVO) but similarly valued. We will take a look at Green Plains Inc. (NASDAQ:GPRE), Extraction Oil & Gas, Inc. (NASDAQ:XOG), Global Medical REIT Inc. (NYSE:GMRE), and El Pollo LoCo Holdings Inc (NASDAQ:LOCO). This group of stocks' market valuations are closest to VIVO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GPRE,16,100604,0 XOG,17,57652,0 GMRE,8,15835,-5 LOCO,10,9183,-1 Average,12.75,45819,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $53 million in VIVO's case. Extraction Oil & Gas, Inc. (NASDAQ:XOG) is the most popular stock in this table. On the other hand Global Medical REIT Inc. (NYSE:GMRE) is the least popular one with only 8 bullish hedge fund positions. Meridian Bioscience, Inc. (NASDAQ:VIVO) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately VIVO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VIVO were disappointed as the stock returned -3.6% during the fourth quarter (through the end of November) 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.