We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Bio-Techne Corporation (NASDAQ:TECH) and determine whether hedge funds skillfully traded this stock.
Bio-Techne Corporation (NASDAQ:TECH) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 26 hedge funds’ portfolios at the end of March. At the end of this article we will also compare TECH to other stocks including Zendesk Inc (NYSE:ZEN), Annaly Capital Management, Inc. (NYSE:NLY), and Henry Schein, Inc. (NASDAQ:HSIC) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. With all of this in mind we’re going to view the latest hedge fund action encompassing Bio-Techne Corporation (NASDAQ:TECH).
How have hedgies been trading Bio-Techne Corporation (NASDAQ:TECH)?
At Q1’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in TECH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Bio-Techne Corporation (NASDAQ:TECH) was held by Renaissance Technologies, which reported holding $92.3 million worth of stock at the end of September. It was followed by Select Equity Group with a $63 million position. Other investors bullish on the company included Royce & Associates, Point72 Asset Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Sandler Capital Management allocated the biggest weight to Bio-Techne Corporation (NASDAQ:TECH), around 1.72% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, designating 0.62 percent of its 13F equity portfolio to TECH.
Because Bio-Techne Corporation (NASDAQ:TECH) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there is a sect of money managers who were dropping their entire stakes in the first quarter. Interestingly, David Harding’s Winton Capital Management cut the largest position of all the hedgies followed by Insider Monkey, comprising about $3 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $1.6 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Bio-Techne Corporation (NASDAQ:TECH). We will take a look at Zendesk Inc (NYSE:ZEN), Annaly Capital Management, Inc. (NYSE:NLY), Henry Schein, Inc. (NASDAQ:HSIC), and Centrais Eletricas Brasileiras S.A. – Eletrobras (NYSE:EBR). This group of stocks’ market valuations are similar to TECH’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $639 million. That figure was $313 million in TECH’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras S.A. – Eletrobras (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. Bio-Techne Corporation (NASDAQ:TECH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on TECH as the stock returned 39.4% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.