How The Cooper Companies Inc (COO) Stacks Up Against Its Peers

Hedge funds are not perfect. They have their bad picks just like everyone else. Valeant, a stock hedge funds have loved, lost 79% during the last 12 months ending in November 21. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 mid-cap stocks among the best performing hedge funds yielded an average return of 18% in the same time period, vs. a gain of 7.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of The Cooper Companies Inc (NYSE:COO).

Is The Cooper Companies Inc (NYSE:COO) a buy here? Prominent investors are turning bullish. The number of bullish hedge fund bets improved by 5 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The WhiteWave Foods Co (NYSE:WWAV), LG Display Co Ltd. (ADR) (NYSE:LPL), and Ally Financial Inc (NYSE:ALLY) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about The Cooper Companies Inc (NYSE:COO)?

At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 24% from one quarter earlier, helping hedge fund sentiment rise above its recent depressed levels. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Point72 Asset Management, run by Steve Cohen, holds the number one position in The Cooper Companies Inc (NYSE:COO). According to regulatory filings, the fund has a $48.5 million position in the stock. The second largest stake is held by OrbiMed Advisors, managed by Samuel Isaly, which holds a $44.8 million position. Some other peers that hold long positions encompass David Blood and Al Gore’s Generation Investment Management, Israel Englander’s Millennium Management, and Barry Dargan’s Intermede Investment Partners.

Now, key hedge funds were leading the bulls’ herd. Millennium Management established the biggest position in The Cooper Companies Inc (NYSE:COO). According to regulatory filings, the fund had $29.7 million invested in the company at the end of the quarter. Principal Global Investors’ Columbus Circle Investors also made a $21.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, James Dondero’s Highland Capital Management, and David E. Shaw’s D E Shaw.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Cooper Companies Inc (NYSE:COO) but similarly valued. We will take a look at The WhiteWave Foods Co (NYSE:WWAV), LG Display Co Ltd. (ADR) (NYSE:LPL), Ally Financial Inc (NYSE:ALLY), and Bunge Ltd (NYSE:BG). This group of stocks’ market values resemble COO’s market value.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1.23 billion. That figure was a meager $329 million in COO’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand LG Display Co Ltd. (ADR) (NYSE:LPL) is the least popular one with only 12 bullish hedge fund positions. The Cooper Companies Inc (NYSE:COO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ALLY might be a better candidate to consider a long position in.

Disclosure: None