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Hedge Funds Getting Bullish On Quidel Corporation (QDEL)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Quidel Corporation (NASDAQ:QDEL).

Is Quidel Corporation (NASDAQ:QDEL) the right investment to pursue these days? The best stock pickers are buying. The number of bullish hedge fund bets advanced by 4 recently. Our calculations also showed that QDEL 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.

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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Andrew Sandler of Sandler Capital 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 one. We 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 check out the recent hedge fund action encompassing Quidel Corporation (NASDAQ:QDEL).

What does smart money think about Quidel Corporation (NASDAQ:QDEL)?

Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards QDEL over the last 18 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Mario Gabelli’s GAMCO Investors has the largest position in Quidel Corporation (NASDAQ:QDEL), worth close to $42.2 million, comprising 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by D. E. Shaw, which holds a $21.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions comprise Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Andrew Sandler’s Sandler Capital Management. In terms of the portfolio weights assigned to each position Birchview Capital allocated the biggest weight to Quidel Corporation (NASDAQ:QDEL), around 4.24% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, designating 3.51 percent of its 13F equity portfolio to QDEL.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Sandler Capital Management, managed by Andrew Sandler, created the biggest position in Quidel Corporation (NASDAQ:QDEL). Sandler Capital Management had $5.2 million invested in the company at the end of the quarter. Efrem Kamen’s Pura Vida Investments also made a $5.1 million investment in the stock during the quarter. The following funds were also among the new QDEL investors: George McCabe’s Portolan Capital Management, Adam Usdan’s Trellus Management Company, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Quidel Corporation (NASDAQ:QDEL) but similarly valued. These stocks are Axalta Coating Systems Ltd (NYSE:AXTA), Eastgroup Properties Inc (NYSE:EGP), Solaredge Technologies Inc (NASDAQ:SEDG), and LogMeIn Inc (NASDAQ:LOGM). This group of stocks’ market caps match QDEL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXTA 49 1105920 -11
EGP 13 36375 3
SEDG 27 264038 -1
LOGM 28 759486 -3
Average 29.25 541455 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $541 million. That figure was $126 million in QDEL’s case. Axalta Coating Systems Ltd (NYSE:AXTA) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 13 bullish hedge fund positions. Quidel Corporation (NASDAQ:QDEL) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on QDEL as the stock returned 70.5% during the second quarter and outperformed the market by an even larger margin.

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