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Was The Smart Money Right About Bio-Rad Laboratories, Inc. (BIO)?

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·6 min read
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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 Bio-Rad Laboratories, Inc. (NYSE:BIO) in this article.

Is Bio-Rad Laboratories, Inc. (NYSE:BIO) a buy here? Prominent investors were in a bearish mood. The number of long hedge fund bets dropped by 6 recently. Bio-Rad Laboratories, Inc. (NYSE:BIO) was in 42 hedge funds' portfolios at the end of December. The all time high for this statistic is 54. Our calculations also showed that BIO isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 48 hedge funds in our database with BIO positions at the end of the third quarter.

If you'd ask most shareholders, hedge funds are seen as slow, old investment vehicles of the past. While there are more than 8000 funds with their doors open at the moment, Our experts choose to focus on the elite of this group, approximately 850 funds. These hedge fund managers control most of the hedge fund industry's total asset base, and by observing their highest performing investments, Insider Monkey has uncovered several investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Paul Marshall Marshall Wace
Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. Now let's view the key hedge fund action encompassing Bio-Rad Laboratories, Inc. (NYSE:BIO).

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

At the end of the fourth quarter, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 44 hedge funds with a bullish position in BIO a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Is BIO A Good Stock To Buy?
Is BIO A Good Stock To Buy?

The largest stake in Bio-Rad Laboratories, Inc. (NYSE:BIO) was held by Marshall Wace LLP, which reported holding $215.3 million worth of stock at the end of December. It was followed by Intermede Investment Partners with a $131.1 million position. Other investors bullish on the company included Fisher Asset Management, Polar Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Intermede Investment Partners allocated the biggest weight to Bio-Rad Laboratories, Inc. (NYSE:BIO), around 3.79% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, designating 3.15 percent of its 13F equity portfolio to BIO.

Judging by the fact that Bio-Rad Laboratories, Inc. (NYSE:BIO) has faced a decline in interest from hedge fund managers, logic holds that there is a sect of funds who were dropping their entire stakes by the end of the fourth quarter. Interestingly, Rajiv Jain's GQG Partners cut the largest position of the "upper crust" of funds watched by Insider Monkey, comprising an estimated $182.6 million in stock. Paolo Mortarotti's fund, Tower House Partners, also sold off its stock, about $46.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds by the end of the fourth quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Bio-Rad Laboratories, Inc. (NYSE:BIO) but similarly valued. We will take a look at Fox Corporation (NASDAQ:FOXA), Burlington Stores Inc (NYSE:BURL), Fox Corporation (NASDAQ:FOX), Catalent Inc (NYSE:CTLT), Akamai Technologies, Inc. (NASDAQ:AKAM), Agnico Eagle Mines Limited (NYSE:AEM), and Cheniere Energy Partners LP (NYSE:CQP). This group of stocks' market values resemble BIO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FOXA,39,1293023,7 BURL,29,1335724,-1 FOX,17,530820,2 CTLT,35,839418,-5 AKAM,33,280317,-7 AEM,36,388901,8 CQP,4,9283,1 Average,27.6,668212,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $668 million. That figure was $1118 million in BIO's case. Fox Corporation (NASDAQ:FOXA) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Bio-Rad Laboratories, Inc. (NYSE:BIO) is more popular among hedge funds. Our overall hedge fund sentiment score for BIO is 72.3. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Unfortunately BIO wasn't nearly as popular as these 10 stocks and hedge funds that were betting on BIO were disappointed as the stock returned 8.1% since the end of the fourth quarter (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.

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