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Quidel Corporation (QDEL): Hedge Funds In Wait-and-See Mode

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Quidel Corporation (NASDAQ:QDEL).

Hedge fund interest in Quidel Corporation (NASDAQ:QDEL) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare QDEL to other stocks including International Bancshares Corp (NASDAQ:IBOC), Rogers Corporation (NYSE:ROG), and Inovalon Holdings Inc (NASDAQ:INOV) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the key hedge fund action regarding Quidel Corporation (NASDAQ:QDEL).

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

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in QDEL a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Among these funds, GAMCO Investors held the most valuable stake in Quidel Corporation (NASDAQ:QDEL), which was worth $26.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $12.2 million worth of shares. D E Shaw, Marshall Wace, 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 Birchview Capital allocated the biggest weight to Quidel Corporation (NASDAQ:QDEL), around 2% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.72 percent of its 13F equity portfolio to QDEL.

Because Quidel Corporation (NASDAQ:QDEL) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds who sold off their full holdings last quarter. Interestingly, Alec Litowitz and Ross Laser’s Magnetar Capital dropped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth about $2.6 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $0.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Quidel Corporation (NASDAQ:QDEL) but similarly valued. These stocks are International Bancshares Corp (NASDAQ:IBOC), Rogers Corporation (NYSE:ROG), Inovalon Holdings Inc (NASDAQ:INOV), and The Ensign Group, Inc. (NASDAQ:ENSG). All of these stocks’ market caps are similar to QDEL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IBOC 16 161597 -2
ROG 19 73962 0
INOV 11 21045 4
ENSG 16 118684 2
Average 15.5 93822 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $78 million in QDEL’s case. Rogers Corporation (NYSE:ROG) is the most popular stock in this table. On the other hand Inovalon Holdings Inc (NASDAQ:INOV) is the least popular one with only 11 bullish hedge fund positions. Quidel Corporation (NASDAQ:QDEL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on QDEL as the stock returned 11.9% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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