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Here is What Hedge Funds Think About Henry Schein, Inc. (HSIC)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Henry Schein, Inc. (NASDAQ:HSIC).

Is Henry Schein, Inc. (NASDAQ:HSIC) going to take off soon? The best stock pickers are getting less bullish. The number of long hedge fund bets dropped by 2 lately. Our calculations also showed that HSIC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). HSIC was in 22 hedge funds’ portfolios at the end of the third quarter of 2019. There were 24 hedge funds in our database with HSIC holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Blood

David Blood of Generation Investment Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the latest hedge fund action surrounding Henry Schein, Inc. (NASDAQ:HSIC).

How have hedgies been trading Henry Schein, Inc. (NASDAQ:HSIC)?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HSIC over the last 17 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Henry Schein, Inc. (NASDAQ:HSIC) was held by Generation Investment Management, which reported holding $634.5 million worth of stock at the end of September. It was followed by Select Equity Group with a $312 million position. Other investors bullish on the company included AQR Capital Management, D E Shaw, and Winton Capital Management. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to Henry Schein, Inc. (NASDAQ:HSIC), around 4.48% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, dishing out 2.11 percent of its 13F equity portfolio to HSIC.

Seeing as Henry Schein, Inc. (NASDAQ:HSIC) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies who were dropping their positions entirely in the third quarter. At the top of the heap, Clint Carlson’s Carlson Capital said goodbye to the biggest position of the 750 funds watched by Insider Monkey, worth about $16.5 million in stock. Israel Englander’s fund, Millennium Management, also dumped its stock, about $14.9 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Henry Schein, Inc. (NASDAQ:HSIC). We will take a look at WestRock Company (NYSE:WRK), Targa Resources Corp (NYSE:TRGP), Iron Mountain Incorporated (NYSE:IRM), and FactSet Research Systems Inc. (NYSE:FDS). This group of stocks’ market valuations match HSIC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WRK 26 606489 0
TRGP 16 241333 -2
IRM 14 58210 0
FDS 19 262033 0
Average 18.75 292016 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $292 million. That figure was $1248 million in HSIC’s case. WestRock Company (NYSE:WRK) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 14 bullish hedge fund positions. Henry Schein, Inc. (NASDAQ:HSIC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on HSIC, though not to the same extent, as the stock returned 8.5% during the first two months of the fourth quarter and outperformed the market as well.

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

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