Should I Avoid Danaher Corporation (DHR)?

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Danaher Corporation (NYSE:DHR) based on that data.

Danaher Corporation (NYSE:DHR) was in 78 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 81. DHR investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 81 hedge funds in our database with DHR positions at the end of the first quarter. Our calculations also showed that DHR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Ken Fisher of Fisher Asset Management

At Insider Monkey, we scour multiple sources to uncover 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 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. Keeping this in mind we’re going to take a peek at the recent hedge fund action regarding Danaher Corporation (NYSE:DHR).

Do Hedge Funds Think DHR Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 78 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DHR over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of Danaher Corporation (NYSE:DHR), with a stake worth $892.2 million reported as of the end of June. Trailing Fisher Asset Management was Third Point, which amassed a stake valued at $768.9 million. D1 Capital Partners, Akre Capital Management, and Impax Asset Management 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 Intermede Investment Partners allocated the biggest weight to Danaher Corporation (NYSE:DHR), around 5.66% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, setting aside 5.05 percent of its 13F equity portfolio to DHR.

Seeing as Danaher Corporation (NYSE:DHR) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of money managers that elected to cut their full holdings last quarter. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors cut the biggest investment of the 750 funds watched by Insider Monkey, valued at an estimated $67.4 million in stock. Simon Sadler’s fund, Segantii Capital, also dumped its stock, about $14.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Danaher Corporation (NYSE:DHR) but similarly valued. We will take a look at Wells Fargo & Company (NYSE:WFC), Accenture Plc (NYSE:ACN), BHP Group (NYSE:BHP), Shopify Inc (NYSE:SHOP), United Parcel Service, Inc. (NYSE:UPS), T-Mobile US, Inc. (NASDAQ:TMUS), and Texas Instruments Incorporated (NASDAQ:TXN). This group of stocks’ market caps match DHR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WFC 94 7083950 -2
ACN 52 3151789 4
BHP 18 752906 0
SHOP 85 13978469 -6
UPS 52 2188804 8
TMUS 100 8020682 2
TXN 50 2468540 8
Average 64.4 5377877 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 64.4 hedge funds with bullish positions and the average amount invested in these stocks was $5378 million. That figure was $6415 million in DHR’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 18 bullish hedge fund positions. Danaher Corporation (NYSE:DHR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DHR is 67.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.1% in 2021 through September 20th and still beat the market by 6.9 percentage points. Hedge funds were also right about betting on DHR as the stock returned 20.8% since the end of Q2 (through 9/20) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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