Do Hedge Funds Love Thermo Fisher Scientific Inc. (TMO)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Thermo Fisher Scientific Inc. (NYSE:TMO) based on those filings.

Thermo Fisher Scientific Inc. (NYSE:TMO) shareholders have witnessed an increase in hedge fund sentiment in recent months. Thermo Fisher Scientific Inc. (NYSE:TMO) was in 87 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 89. Our calculations also showed that TMO ranked 29th among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Ole Andreas Halvorsen Viking Global

Ole Andreas Halvorsen of Viking Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a glance at the key hedge fund action encompassing Thermo Fisher Scientific Inc. (NYSE:TMO).

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

At second quarter’s end, a total of 87 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the first quarter of 2020. By comparison, 73 hedge funds held shares or bullish call options in TMO a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of Thermo Fisher Scientific Inc. (NYSE:TMO), with a stake worth $971.8 million reported as of the end of June. Trailing Fisher Asset Management was Generation Investment Management, which amassed a stake valued at $860.9 million. Farallon Capital, AQR Capital Management, and Viking Global 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 Cryder Capital allocated the biggest weight to Thermo Fisher Scientific Inc. (NYSE:TMO), around 10.05% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, earmarking 8.47 percent of its 13F equity portfolio to TMO.

Consequently, some big names have been driving this bullishness. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, created the biggest position in Thermo Fisher Scientific Inc. (NYSE:TMO). Healthcor Management LP had $92.3 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $29.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Christopher James’s Partner Fund Management, Vishal Saluja and Pham Quang’s Endurant Capital Management, and Leonard Green’s Leonard Green & Partners.

Let’s now review hedge fund activity in other stocks similar to Thermo Fisher Scientific Inc. (NYSE:TMO). We will take a look at Merck & Co., Inc. (NYSE:MRK), Broadcom Inc (NASDAQ:AVGO), Novo Nordisk A/S (NYSE:NVO), Danaher Corporation (NYSE:DHR), Wells Fargo & Company (NYSE:WFC), Accenture Plc (NYSE:ACN), and BHP Group (NYSE:BHP). This group of stocks’ market caps match TMO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MRK 79 5296278 0
AVGO 47 3031104 -6
NVO 20 3561818 -3
DHR 78 6414646 -3
WFC 94 7083950 -2
ACN 52 3151789 4
BHP 18 752906 0
Average 55.4 4184642 -1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 55.4 hedge funds with bullish positions and the average amount invested in these stocks was $4185 million. That figure was $7391 million in TMO’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 18 bullish hedge fund positions. Thermo Fisher Scientific Inc. (NYSE:TMO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TMO is 84.7. 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 24.1% in 2021 through September 20th and still beat the market by 6.9 percentage points. Hedge funds were also right about betting on TMO as the stock returned 17% since the end of Q2 (through 9/20) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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