Henry Schein, Inc. (HSIC): Hedge Funds Are Snapping Up

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Henry Schein, Inc. (NASDAQ:HSIC) to find out whether there were any major changes in hedge funds’ views.

Is Henry Schein, Inc. (NASDAQ:HSIC) worth your attention right now? The best stock pickers were becoming hopeful. The number of bullish hedge fund bets went up by 7 lately. Henry Schein, Inc. (NASDAQ:HSIC) was in 39 hedge funds’ portfolios at the end of June. The all time high for this statistic is 40. Our calculations also showed that HSIC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 32 hedge funds in our database with HSIC positions at the end of the first quarter.

In the eyes of most market participants, hedge funds are assumed to be worthless, old investment vehicles of the past. While there are over 8000 funds with their doors open at the moment, Our experts look at the leaders of this group, around 850 funds. These hedge fund managers command most of the hedge fund industry’s total capital, and by paying attention to their highest performing equity investments, Insider Monkey has figured out various investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Now let’s take a look at the recent hedge fund action surrounding Henry Schein, Inc. (NASDAQ:HSIC).

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

At second quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in HSIC a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Henry Schein, Inc. (NASDAQ:HSIC) was held by Generation Investment Management, which reported holding $993 million worth of stock at the end of June. It was followed by D E Shaw with a $105.9 million position. Other investors bullish on the company included Renaissance Technologies, GAMCO Investors, and AQR Capital Management. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Henry Schein, Inc. (NASDAQ:HSIC), around 6.62% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, dishing out 4.12 percent of its 13F equity portfolio to HSIC.

As one would reasonably expect, key hedge funds have jumped into Henry Schein, Inc. (NASDAQ:HSIC) headfirst. Lodge Hill Capital, managed by Clint Murray, assembled the biggest position in Henry Schein, Inc. (NASDAQ:HSIC). Lodge Hill Capital had $14.1 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $8.2 million investment in the stock during the quarter. The other funds with brand new HSIC positions are Jinghua Yan’s TwinBeech Capital, Michael Gelband’s ExodusPoint Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks similar to Henry Schein, Inc. (NASDAQ:HSIC). These stocks are GFL Environmental Inc. (NYSE:GFL), Paylocity Holding Corp (NASDAQ:PCTY), Ares Management Corp (NYSE:ARES), Kirkland Lake Gold Ltd. (NYSE:KL), Opendoor Technologies Inc. (NASDAQ:OPEN), Owens Corning (NYSE:OC), and East West Bancorp, Inc. (NASDAQ:EWBC). This group of stocks’ market caps resemble HSIC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $561 million. That figure was $1387 million in HSIC’s case. Opendoor Technologies Inc. (NASDAQ:OPEN) is the most popular stock in this table. On the other hand Paylocity Holding Corp (NASDAQ:PCTY) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Henry Schein, Inc. (NASDAQ:HSIC) is more popular among hedge funds. Our overall hedge fund sentiment score for HSIC is 89.3. 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 returned 21.8% in 2021 through October 11th but still managed to beat the market by 4.4 percentage points. Hedge funds were also right about betting on HSIC as the stock returned 6.9% since the end of June (through 10/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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