With the fourth-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 first quarter of 2021. One of these stocks was Thermo Fisher Scientific Inc. (NYSE:TMO).
Is TMO stock a buy or sell? Thermo Fisher Scientific Inc. (NYSE:TMO) investors should pay attention to an increase in hedge fund interest lately. Thermo Fisher Scientific Inc. (NYSE:TMO) was in 89 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 80. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 80 hedge funds in our database with TMO holdings at the end of September. Our calculations also showed that TMO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 percentage points since March 2017 (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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 (or at the end of this article). Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing Thermo Fisher Scientific Inc. (NYSE:TMO).
Do Hedge Funds Think TMO Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 89 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TMO over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in Thermo Fisher Scientific Inc. (NYSE:TMO), worth close to $806.4 million, comprising 0.6% of its total 13F portfolio. The second most bullish fund manager is Farallon Capital, which holds a $519 million position; the fund has 3.4% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions encompass David Blood and Al Gore’s Generation Investment Management, William von Mueffling’s Cantillon Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Cryder Capital allocated the biggest weight to Thermo Fisher Scientific Inc. (NYSE:TMO), around 10.87% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, setting aside 8.4 percent of its 13F equity portfolio to TMO.
As one would reasonably expect, some big names have jumped into Thermo Fisher Scientific Inc. (NYSE:TMO) headfirst. Castle Hook Partners, managed by Josh Donfeld and David Rogers, assembled the largest position in Thermo Fisher Scientific Inc. (NYSE:TMO). Castle Hook Partners had $48.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $33 million investment in the stock during the quarter. The other funds with brand new TMO positions are Rob Cope’s Columbus Point, Donald Sussman’s Paloma Partners, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks similar to Thermo Fisher Scientific Inc. (NYSE:TMO). These stocks are Broadcom Inc (NASDAQ:AVGO), Exxon Mobil Corporation (NYSE:XOM), Accenture Plc (NYSE:ACN), QUALCOMM, Incorporated (NASDAQ:QCOM), T-Mobile US, Inc. (NASDAQ:TMUS), Costco Wholesale Corporation (NASDAQ:COST), and BHP Group (NYSE:BHP). This group of stocks’ market caps match TMO’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 63 hedge funds with bullish positions and the average amount invested in these stocks was $3463 million. That figure was $5471 million in TMO’s case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 20 bullish hedge fund positions. Thermo Fisher Scientific Inc. (NYSE:TMO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TMO is 81.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately TMO wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TMO were disappointed as the stock returned -3.3% since the end of December (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.