Is IDEXX Laboratories (IDXX) A Smart Long-Term Buy?

Carillon Tower Advisers, an investment management firm, published its “Carillon Eagle Mid Cap Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. Mid-cap stocks extended their recent run of success in the second quarter, advancing for the fifth consecutive quarter following the sharp selloff induced by the early stages of the pandemic. Among the two style indexes, the Russell Midcap® Growth Index (up 11.07%) staged a strong comeback against its Russell Midcap® Value Index (up 5.66%) counterpart, after lagging rather significantly in the first quarter. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Carillon Tower Advisers, the fund mentioned IDEXX Laboratories, Inc. (NASDAQ: IDXX) and discussed its stance on the firm. IDEXX Laboratories, Inc. is a Westbrook, Maine-based diagnostic tests and software monitoring systems for managing the herd and flock health and productivity provider with a $55.9 billion market capitalization. IDXX delivered a 31.35% return since the beginning of the year, while its 12-month returns are up by 85.36%. The stock closed at $661.65 per share on September 15, 2021.

Here is what Carillon Tower Advisers has to say about IDEXX Laboratories, Inc. in its Q2 2021 investor letter:

IDEXX Laboratories develops, manufactures, and distributes products and provides services primarily for the companion animal veterinary, livestock and poultry, dairy, and water testing markets. The firm has been an impressive contributor, as it continues to benefit from its market-leading position, as well as from a steady pace of new product introductions. It also is benefitting from the uptick in pet adoptions and overall level of pet-related
spending induced by the pandemic.”

 

animal, veterinarian, health, farmer, goat, care, agriculture, examination, breeder, people, vet, barn, breeding, woman, illness, observation, man, doctor, carrying,

Goodluz/Shutterstock.com

Based on our calculations, IDEXX Laboratories, Inc. (NASDAQ: IDXX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. IDXX was in 39 hedge fund portfolios at the end of the first half of 2021, compared to 49 funds in the previous quarter. IDEXX Laboratories, Inc. (NASDAQ: IDXX) delivered an 8.76% return in the past 3 months.

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 115 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.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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.

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