We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Quidel Corporation (NASDAQ:QDEL) based on those filings.
Quidel Corporation (NASDAQ:QDEL) shareholders have witnessed an increase in hedge fund interest in recent months. Our calculations also showed that QDEL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the eyes of most shareholders, hedge funds are seen as unimportant, old investment vehicles of years past. While there are over 8000 funds trading at the moment, We choose to focus on the elite of this club, about 850 funds. Most estimates calculate that this group of people preside over the majority of the smart money’s total capital, and by keeping track of their matchless equity investments, Insider Monkey has figured out several investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Roberto Mignone of Bridger Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 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 view the recent hedge fund action surrounding Quidel Corporation (NASDAQ:QDEL).
How have hedgies been trading Quidel Corporation (NASDAQ:QDEL)?
At Q4’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the third quarter of 2019. On the other hand, there were a total of 16 hedge funds with a bullish position in QDEL a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Quidel Corporation (NASDAQ:QDEL) was held by GAMCO Investors, which reported holding $32.6 million worth of stock at the end of September. It was followed by Bridger Management with a $21.5 million position. Other investors bullish on the company included Millennium Management, D E Shaw, and GLG Partners. In terms of the portfolio weights assigned to each position Birchview Capital allocated the biggest weight to Quidel Corporation (NASDAQ:QDEL), around 2.66% of its 13F portfolio. Bridger Management is also relatively very bullish on the stock, dishing out 1.55 percent of its 13F equity portfolio to QDEL.
As one would reasonably expect, key money managers have been driving this bullishness. Bridger Management, managed by Roberto Mignone, established the most valuable position in Quidel Corporation (NASDAQ:QDEL). Bridger Management had $21.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $3 million position during the quarter. The following funds were also among the new QDEL investors: David Harding’s Winton Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Quidel Corporation (NASDAQ:QDEL). These stocks are Uniqure NV (NASDAQ:QURE), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), United States Cellular Corporation (NYSE:USM), and FS KKR Capital Corp. (NYSE:FSK). This group of stocks’ market caps resemble QDEL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QURE | 44 | 1052404 | 4 |
| BJ | 22 | 191163 | -4 |
| USM | 21 | 132835 | 3 |
| FSK | 28 | 234006 | 2 |
| Average | 28.75 | 402602 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $403 million. That figure was $120 million in QDEL’s case. Uniqure NV (NASDAQ:QURE) is the most popular stock in this table. On the other hand United States Cellular Corporation (NYSE:USM) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Quidel Corporation (NASDAQ:QDEL) is even less popular than USM. Hedge funds clearly dropped the ball on QDEL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. A small number of hedge funds were also right about betting on QDEL as the stock returned 7.5% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
