IDEXX Laboratories, Inc. (IDXX): Are Hedge Funds Right About This Stock?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

IDEXX Laboratories, Inc. (NASDAQ:IDXX) has seen an increase in hedge fund interest in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The Cooper Companies, Inc. (NYSE:COO), The WhiteWave Foods Co (NYSE:WWAV), and LG Display Co Ltd. (ADR) (NYSE:LPL) to gather more data points.

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Now, let’s take a glance at the recent action surrounding IDEXX Laboratories, Inc. (NASDAQ:IDXX).

What does the smart money think about IDEXX Laboratories, Inc. (NASDAQ:IDXX)?

Heading into the fourth quarter of 2016, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 20% from the previous quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

idxx

According to Insider Monkey’s hedge fund database, Robert Joseph Caruso’s Select Equity Group has the most valuable position in IDEXX Laboratories, Inc. (NASDAQ:IDXX), worth close to $246.2 million, amounting to 2.1% of its total 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $79.9 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Jim Simons’s Renaissance Technologies, Principal Global Investors’s Columbus Circle Investors and Richard Chilton’s Chilton Investment Company.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Navellier & Associates, managed by Louis Navellier, initiated the largest position in IDEXX Laboratories, Inc. (NASDAQ:IDXX). According to regulatory filings, the fund had $4.7 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also made a $2.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Simon Sadler’s Segantii Capital, Ken Griffin’s Citadel Investment Group, and Matthew Tewksbury’s Stevens Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as IDEXX Laboratories, Inc. (NASDAQ:IDXX) but similarly valued. We will take a look at The Cooper Companies, Inc. (NYSE:COO), The WhiteWave Foods Co (NYSE:WWAV), LG Display Co Ltd. (ADR) (NYSE:LPL), and Ally Financial Inc (NYSE:ALLY). All of these stocks’ market caps are closest to IDXX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
COO 26 329471 5
WWAV 38 1813467 1
LPL 12 46029 -1
ALLY 50 2271501 1

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1.12 billion. That figure was $740 million in IDXX’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand LG Display Co Ltd. (ADR) (NYSE:LPL) is the least popular one with only 12 bullish hedge fund positions. IDEXX Laboratories, Inc. (NASDAQ:IDXX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ALLY might be a better candidate to consider a long position.

Disclosure: none.