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Do Hedge Funds Love DENTSPLY SIRONA Inc. (XRAY)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of DENTSPLY SIRONA Inc. (NASDAQ:XRAY).

DENTSPLY SIRONA Inc. (NASDAQ:XRAY) shareholders have witnessed an increase in support from the world’s most elite money managers of late. XRAY was in 30 hedge funds’ portfolios at the end of the first quarter of 2020. There were 28 hedge funds in our database with XRAY positions at the end of the previous quarter. Our calculations also showed that XRAY 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Blood

David Blood of Generation Investment Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the new hedge fund action regarding DENTSPLY SIRONA Inc. (NASDAQ:XRAY).

How have hedgies been trading DENTSPLY SIRONA Inc. (NASDAQ:XRAY)?

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 7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in XRAY over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in DENTSPLY SIRONA Inc. (NASDAQ:XRAY) was held by Generation Investment Management, which reported holding $721.7 million worth of stock at the end of September. It was followed by Select Equity Group with a $76 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to DENTSPLY SIRONA Inc. (NASDAQ:XRAY), around 5.12% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, earmarking 1.71 percent of its 13F equity portfolio to XRAY.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in DENTSPLY SIRONA Inc. (NASDAQ:XRAY). Arrowstreet Capital had $7.1 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also made a $6.5 million investment in the stock during the quarter. The following funds were also among the new XRAY investors: Benjamin A. Smith’s Laurion Capital Management, Bhagwan Jay Rao’s Integral Health Asset Management, and Greg Eisner’s Engineers Gate Manager.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as DENTSPLY SIRONA Inc. (NASDAQ:XRAY) but similarly valued. We will take a look at ViacomCBS Inc. (NASDAQ:VIAC), Regions Financial Corporation (NYSE:RF), Universal Health Services, Inc. (NYSE:UHS), and EXACT Sciences Corporation (NASDAQ:EXAS). This group of stocks’ market caps are similar to XRAY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VIAC 54 952791 -10
RF 37 235284 0
UHS 30 443724 -1
EXAS 34 514351 -7
Average 38.75 536538 -4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.75 hedge funds with bullish positions and the average amount invested in these stocks was $537 million. That figure was $997 million in XRAY’s case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Universal Health Services, Inc. (NYSE:UHS) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks DENTSPLY SIRONA Inc. (NASDAQ:XRAY) is even less popular than UHS. 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 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on XRAY, though not to the same extent, as the stock returned 19.8% during the second quarter (through the end of May) and outperformed the market as well.

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