Danaher Corporation (DHR) Fell Out Of Favor With Hedge Funds

In this article we will take a look at whether hedge funds think Danaher Corporation (NYSE:DHR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Danaher Corporation (NYSE:DHR) was in 74 hedge funds’ portfolios at the end of September. The all time high for this statistic is 81. DHR investors should pay attention to a decrease in support from the world’s most elite money managers lately. There were 78 hedge funds in our database with DHR holdings at the end of June. Our calculations also showed that DHR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a look at the recent hedge fund action surrounding Danaher Corporation (NYSE:DHR).

Billionaire Dan Loeb's Top 10 Stock Picks

Dan Loeb of Third Point

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

At the end of the third quarter, a total of 74 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in DHR over the last 25 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, Fisher Asset Management was the largest shareholder of Danaher Corporation (NYSE:DHR), with a stake worth $1049.2 million reported as of the end of September. Trailing Fisher Asset Management was Third Point, which amassed a stake valued at $872.2 million. D1 Capital Partners, Akre Capital Management, and Impax Asset Management 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 Intermede Investment Partners allocated the biggest weight to Danaher Corporation (NYSE:DHR), around 6.43% of its 13F portfolio. Third Point is also relatively very bullish on the stock, earmarking 4.76 percent of its 13F equity portfolio to DHR.

Due to the fact that Danaher Corporation (NYSE:DHR) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few money managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, Renaissance Technologies sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, worth an estimated $132.7 million in stock. Arthur B Cohen and Joseph Healey’s fund, Healthcor Management LP, also said goodbye to its stock, about $103.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 4 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Danaher Corporation (NYSE:DHR) but similarly valued. We will take a look at Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), PepsiCo, Inc. (NASDAQ:PEP), Accenture Plc (NYSE:ACN), Broadcom Inc (NASDAQ:AVGO), Costco Wholesale Corporation (NASDAQ:COST), and Chevron Corporation (NYSE:CVX). All of these stocks’ market caps resemble DHR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INTC 66 6472854 -12
ABT 63 3611527 2
PEP 61 4435441 -5
ACN 56 4460650 4
AVGO 50 2706386 3
COST 55 4393346 1
CVX 51 4442202 1
Average 57.4 4360344 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 57.4 hedge funds with bullish positions and the average amount invested in these stocks was $4360 million. That figure was $6947 million in DHR’s case. Intel Corporation (NASDAQ:INTC) is the most popular stock in this table. On the other hand Broadcom Inc (NASDAQ:AVGO) is the least popular one with only 50 bullish hedge fund positions. Compared to these stocks Danaher Corporation (NYSE:DHR) is more popular among hedge funds. Our overall hedge fund sentiment score for DHR is 78.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately DHR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DHR were disappointed as the stock returned 5.6% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 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.