With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Abbott Laboratories (NYSE:ABT).
Is ABT a good stock to buy now? Prominent investors were taking a bearish view. The number of long hedge fund positions decreased by 5 in recent months. Abbott Laboratories (NYSE:ABT) was in 62 hedge funds’ portfolios at the end of September. The all time high for this statistics is 67. Our calculations also showed that ABT isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to take a look at the latest hedge fund action encompassing Abbott Laboratories (NYSE:ABT).
What have hedge funds been doing with Abbott Laboratories (NYSE:ABT)?
At the end of the third quarter, a total of 62 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ABT over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GQG Partners was the largest shareholder of Abbott Laboratories (NYSE:ABT), with a stake worth $1578.9 million reported as of the end of September. Trailing GQG Partners was Fisher Asset Management, which amassed a stake valued at $778.8 million. Diamond Hill Capital, Citadel Investment Group, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position GQG Partners allocated the biggest weight to Abbott Laboratories (NYSE:ABT), around 5.4% of its 13F portfolio. Blue Pool Capital is also relatively very bullish on the stock, designating 5.2 percent of its 13F equity portfolio to ABT.
Judging by the fact that Abbott Laboratories (NYSE:ABT) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers who sold off their full holdings heading into Q4. Interestingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP cut the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising close to $58.3 million in stock, and Renaissance Technologies was right behind this move, as the fund sold off about $47.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 5 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Abbott Laboratories (NYSE:ABT) but similarly valued. We will take a look at PepsiCo, Inc. (NASDAQ:PEP), SAP SE (NYSE:SAP), Toyota Motor Corporation (NYSE:TM), Oracle Corporation (NYSE:ORCL), Thermo Fisher Scientific Inc. (NYSE:TMO), Cisco Systems, Inc. (NASDAQ:CSCO), and McDonald’s Corporation (NYSE:MCD). This group of stocks’ market values resemble ABT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.6 hedge funds with bullish positions and the average amount invested in these stocks was $2738 million. That figure was $4286 million in ABT’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 12 bullish hedge fund positions. Abbott Laboratories (NYSE:ABT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABT is 64.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately ABT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ABT were disappointed as the stock returned -0.3% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.