Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
#5 Danaher Corporation (NYSE:DHR)
– Number of Hedge Fund Holders (as of March 31): 46
– Total Value of Hedge Fund Holdings (as of March 31): $2.2 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 3.40%
A total of 46 funds from our database held shares of Danaher Corporation (NYSE:DHR) at the end of March, up six from that of the previous quarter. Among the funds that added to their holdings was Dan Loeb’s Third Point, which raised its stake by 65% to 3.7 million shares. The 3.7 million shares accounted for 3.23% of Third Point’s equity portfolio and was the fund’s eighth largest holding. Danaher plans to officially spin-off Fortive Corporation in early July in a move that could potentially unlock the value of the shares.
#4 Thermo Fisher Scientific Inc. (NYSE:TMO)
– Number of Hedge Fund Holders (as of March 31): 50
– Total Value of Hedge Fund Holdings (as of March 31): $2.44 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 4.40%
Thermo Fisher Scientific Inc. (NYSE:TMO) recently announced that it agreed to purchase FEI Company (NASDAQ:FEIC) for $4.2 billion in cash, or $107.50 per share. FEI is a leader in high-performance electron microscopy and reported revenues of $930 million in 2015. Thermo Fisher management believes the transaction will add $0.30 in adjusted EPS in the first full year after close. The company expects total synergies of around $80 million by year three. Shares are up 7% year-to-date so far.