Hedge Fund Confidence in Sirona Dental Systems, Inc. (SIRO) is Soaring

Is Sirona Dental Systems, Inc. (NASDAQ:SIRO) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Sirona Dental Systems, Inc. (NASDAQ:SIRO) was in 19 hedge funds’ portfolios at the end of September. SIRO investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 13 hedge funds in our database with SIRO holdings at the end of the June quarter. At the end of this article we will also compare SIRO to other stocks including ITC Holdings Corp. (NYSE:ITC), Forest City Enterprises, Inc. (NYSE:FCE), and Old Dominion Freight Line (NASDAQ:ODFL) to get a better sense of its popularity.

In today’s marketplace there are a large number of indicators investors put to use to grade stocks. Two of the most underrated indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the S&P 500 by a healthy amount (see the details here).

Keeping this in mind, we’re going to take a peek at the latest action encompassing Sirona Dental Systems, Inc. (NASDAQ:SIRO).

Hedge fund activity in Sirona Dental Systems, Inc. (NASDAQ:SIRO)

Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 46% hike from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Blood and Al Gore’s Generation Investment Management has the largest position in Sirona Dental Systems, Inc. (NASDAQ:SIRO), worth close to $373.6 million, comprising 5.4% of its total 13F portfolio. On Generation Investment Management’s heels is Cantillon Capital Management, led by William von Mueffling, holding a $213 million position; 4.5% of its 13F portfolio is allocated to the stock. Some other peers that are bullish encompass Greg Poole’s Echo Street Capital Management, Ken Griffin’s Citadel Investment Group, and John Overdeck and David Siegel’s Two Sigma Advisors.

Now, key hedge funds have been driving this bullishness. Echo Street Capital Management established the largest position in Sirona Dental Systems, Inc. (NASDAQ:SIRO). Echo Street Capital Management had $34.1 million invested in the company at the end of the quarter. Citadel Investment Group also made a $27 million investment in the stock during the quarter. The other funds with brand new SIRO positions are Two Sigma Advisors, Noam Gottesman’s GLG Partners, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s go over hedge fund activity in other stocks similar to Sirona Dental Systems, Inc. (NASDAQ:SIRO). These stocks are ITC Holdings Corp. (NYSE:ITC), Forest City Enterprises, Inc. (NYSE:FCE), Old Dominion Freight Line (NASDAQ:ODFL), and Flowers Foods, Inc. (NYSE:FLO). This group of stocks’ market caps match SIRO’s market cap.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $608 million. That figure was $697 million in SIRO’s case. Forest City Enterprises, Inc. (NYSE:FCE) is the most popular stock in this table. On the other hand ITC Holdings Corp. (NYSE:ITC) is the least popular one with only 16 bullish hedge fund positions. Sirona Dental Systems, Inc. (NASDAQ:SIRO) is not the least popular stock in this group but hedge fund interest is still below average, although it is growing. This is a slightly negative signal however and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FCE might be a better candidate to consider a long position in.