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Did Hedge Funds Make The Right Call On Qiagen NV (QGEN) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Qiagen NV (NASDAQ:QGEN) and determine whether the smart money was really smart about this stock.

Qiagen NV (NASDAQ:QGEN) shareholders have witnessed a decrease in support from the world’s most elite money managers recently. Our calculations also showed that QGEN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

YORK CAPITAL MANAGEMENT

James Dinan of York Capital Management

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. Keeping this in mind let’s review the recent hedge fund action encompassing Qiagen NV (NASDAQ:QGEN).

Hedge fund activity in Qiagen NV (NASDAQ:QGEN)

At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -41% from the fourth quarter of 2019. By comparison, 23 hedge funds held shares or bullish call options in QGEN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is QGEN A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Alec Litowitz and Ross Laser’s Magnetar Capital has the most valuable position in Qiagen NV (NASDAQ:QGEN), worth close to $100.8 million, amounting to 2.4% of its total 13F portfolio. The second most bullish fund manager is Balyasny Asset Management, managed by Dmitry Balyasny, which holds a $56.8 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Jet Capital Investors allocated the biggest weight to Qiagen NV (NASDAQ:QGEN), around 5.94% of its 13F portfolio. Magnetar Capital is also relatively very bullish on the stock, setting aside 2.43 percent of its 13F equity portfolio to QGEN.

Because Qiagen NV (NASDAQ:QGEN) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds that decided to sell off their positions entirely last quarter. Interestingly, Farallon Capital said goodbye to the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling about $72.8 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund dumped about $31.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 21 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Qiagen NV (NASDAQ:QGEN). These stocks are NVR, Inc. (NYSE:NVR), Open Text Corporation (NASDAQ:OTEX), ArcelorMittal (NYSE:MT), and Tradeweb Markets Inc. (NASDAQ:TW). This group of stocks’ market caps match QGEN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NVR 34 744980 4
OTEX 18 376098 4
MT 13 123110 -4
TW 30 355406 -6
Average 23.75 399899 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $400 million. That figure was $342 million in QGEN’s case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand ArcelorMittal (NYSE:MT) is the least popular one with only 13 bullish hedge fund positions. Qiagen NV (NASDAQ:QGEN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 but beat the market by 15.5 percentage points. Unfortunately QGEN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on QGEN were disappointed as the stock returned 2.9% during the same time period 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 many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.