In this article we will check out the progression of hedge fund sentiment towards IDEXX Laboratories, Inc. (NASDAQ:IDXX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is IDXX a good stock to buy now? The best stock pickers were becoming more confident. The number of long hedge fund bets went up by 1 in recent months. IDEXX Laboratories, Inc. (NASDAQ:IDXX) was in 41 hedge funds’ portfolios at the end of September. The all time high for this statistic is 40. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that IDXX 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). There were 40 hedge funds in our database with IDXX positions at the end of the second quarter.
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, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis 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 check out the new hedge fund action regarding IDEXX Laboratories, Inc. (NASDAQ:IDXX).
Do Hedge Funds Think IDXX Is A Good Stock To Buy Now?
At third quarter’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in IDXX over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Select Equity Group was the largest shareholder of IDEXX Laboratories, Inc. (NASDAQ:IDXX), with a stake worth $84.9 million reported as of the end of September. Trailing Select Equity Group was Citadel Investment Group, which amassed a stake valued at $71.8 million. Echo Street Capital Management, Rock Springs Capital Management, and GLG Partners 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 Brasada Capital Management allocated the biggest weight to IDEXX Laboratories, Inc. (NASDAQ:IDXX), around 1.89% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, dishing out 1.39 percent of its 13F equity portfolio to IDXX.
As aggregate interest increased, key money managers were leading the bulls’ herd. Woodline Partners, managed by Michael Rockefeller and KarláKroeker, assembled the most outsized position in IDEXX Laboratories, Inc. (NASDAQ:IDXX). Woodline Partners had $25 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $8.2 million position during the quarter. The other funds with brand new IDXX positions are Greg Martinez’s Parkman Healthcare Partners, Joel Greenblatt’s Gotham Asset Management, and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks similar to IDEXX Laboratories, Inc. (NASDAQ:IDXX). These stocks are CoStar Group Inc (NASDAQ:CSGP), Canadian Imperial Bank of Commerce (NYSE:CM), Ross Stores, Inc. (NASDAQ:ROST), Capital One Financial Corp. (NYSE:COF), Synopsys, Inc. (NASDAQ:SNPS), Mizuho Financial Group Inc. (NYSE:MFG), and Amphenol Corporation (NYSE:APH). This group of stocks’ market caps are similar to IDXX’s market cap.
|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 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $1247 million. That figure was $545 million in IDXX’s case. CoStar Group Inc (NASDAQ:CSGP) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 5 bullish hedge fund positions. IDEXX Laboratories, Inc. (NASDAQ:IDXX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IDXX is 72. 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 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on IDXX as the stock returned 16.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.