Is Quidel Corporation (QDEL) A Good Stock To Buy?

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and recouped their losses by the end of the first quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Quidel Corporation (NASDAQ:QDEL).

Quidel Corporation (NASDAQ:QDEL) investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that qdel isn’t among the 30 most popular stocks among hedge funds.

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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to take a look at the latest hedge fund action surrounding Quidel Corporation (NASDAQ:QDEL).

What have hedge funds been doing with Quidel Corporation (NASDAQ:QDEL)?

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in QDEL a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

No of Hedge Funds with QDEL Positions

Among these funds, GAMCO Investors held the most valuable stake in Quidel Corporation (NASDAQ:QDEL), which was worth $32.7 million at the end of the first quarter. On the second spot was D E Shaw which amassed $22.1 million worth of shares. Moreover, Marshall Wace LLP, Renaissance Technologies, and Two Sigma Advisors were also bullish on Quidel Corporation (NASDAQ:QDEL), allocating a large percentage of their portfolios to this stock.

Now, key money managers were breaking ground themselves. GLG Partners, managed by Noam Gottesman, created the biggest position in Quidel Corporation (NASDAQ:QDEL). GLG Partners had $4.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is Adam Usdan’s Trellus Management Company.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Quidel Corporation (NASDAQ:QDEL) but similarly valued. These stocks are Sunoco LP (NYSE:SUN), Colony Capital Inc (NYSE:CLNY), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), and Belmond Ltd (NYSE:BEL). This group of stocks’ market values resemble QDEL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SUN 7 20219 0
CLNY 23 380794 -3
LGND 23 445210 -1
BEL 16 347519 -4
Average 17.25 298436 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $120 million in QDEL’s case. Colony Capital Inc (NYSE:CLNY) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 7 bullish hedge fund positions. Quidel Corporation (NASDAQ:QDEL) is not the most popular stock in this group but hedge fund interest is still above average. 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately QDEL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on QDEL were disappointed as the stock returned -14.8% during the same period 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 13 of these stocks already outperformed the market so far in Q2.

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