Hedge Funds Are Selling Hologic, Inc. (HOLX)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Hologic, Inc. (NASDAQ:HOLX).

Hologic, Inc. (NASDAQ:HOLX) investors should be aware of a decrease in hedge fund interest recently. Hologic, Inc. (NASDAQ:HOLX) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 50. There were 41 hedge funds in our database with HOLX holdings at the end of June. Our calculations also showed that HOLX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s take a peek at the fresh hedge fund action surrounding Hologic, Inc. (NASDAQ:HOLX).

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Larry Robbins of Glenview Capital

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

At third quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HOLX over the last 25 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 Hologic, Inc. (NASDAQ:HOLX) was held by Millennium Management, which reported holding $115.6 million worth of stock at the end of September. It was followed by AQR Capital Management with a $94.1 million position. Other investors bullish on the company included Arrowstreet Capital, Balyasny Asset Management, and Glenview Capital. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Hologic, Inc. (NASDAQ:HOLX), around 6.36% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, designating 3.36 percent of its 13F equity portfolio to HOLX.

Seeing as Hologic, Inc. (NASDAQ:HOLX) has witnessed falling interest from hedge fund managers, it’s easy to see that there is a sect of hedgies that decided to sell off their positions entirely in the third quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dumped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising close to $149.2 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also said goodbye to its stock, about $75.7 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Hologic, Inc. (NASDAQ:HOLX) but similarly valued. We will take a look at Ubiquiti Inc. (NYSE:UI), Seagate Technology Holdings plc (NASDAQ:STX), Hewlett Packard Enterprise Company (NYSE:HPE), Qorvo Inc (NASDAQ:QRVO), Cincinnati Financial Corporation (NASDAQ:CINF), Ally Financial Inc (NYSE:ALLY), and Duke Realty Corporation (NYSE:DRE). This group of stocks’ market caps are closest to HOLX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UI 20 240246 -3
STX 27 1806109 -4
HPE 33 1002469 -1
QRVO 44 1950993 4
CINF 20 661958 -2
ALLY 57 2517368 3
DRE 13 67287 -2
Average 30.6 1178061 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $1178 million. That figure was $717 million in HOLX’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 13 bullish hedge fund positions. Hologic, Inc. (NASDAQ:HOLX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOLX is 55.9. 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. 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 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately HOLX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HOLX were disappointed as the stock returned 1.2% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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