The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Thermo Fisher Scientific Inc. (NYSE:TMO) and determine whether the smart money was really smart about this stock.
Is Thermo Fisher Scientific Inc. (NYSE:TMO) an excellent investment now? Investors who are in the know were in a pessimistic mood. The number of long hedge fund bets decreased by 7 lately. Thermo Fisher Scientific Inc. (NYSE:TMO) was in 73 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 80. Our calculations also showed that TMO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are assumed to be worthless, outdated investment tools of years past. While there are greater than 8000 funds in operation today, We hone in on the leaders of this club, about 850 funds. These investment experts control the lion’s share of the hedge fund industry’s total asset base, and by keeping track of their unrivaled stock picks, Insider Monkey has come up with several investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Currently, investors are pessimistic about commercial real estate investments. So, we are checking out this contrarian play to diversify our market exposure. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to take a peek at the new hedge fund action surrounding Thermo Fisher Scientific Inc. (NYSE:TMO).
How are hedge funds trading Thermo Fisher Scientific Inc. (NYSE:TMO)?
Heading into the third quarter of 2020, a total of 73 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TMO over the last 20 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
The largest stake in Thermo Fisher Scientific Inc. (NYSE:TMO) was held by Viking Global, which reported holding $628.4 million worth of stock at the end of September. It was followed by Generation Investment Management with a $595.9 million position. Other investors bullish on the company included Fisher Asset Management, Farallon Capital, and Cantillon Capital Management. In terms of the portfolio weights assigned to each position Cryder Capital allocated the biggest weight to Thermo Fisher Scientific Inc. (NYSE:TMO), around 13.91% of its 13F portfolio. Thames Capital Management is also relatively very bullish on the stock, designating 4.12 percent of its 13F equity portfolio to TMO.
Because Thermo Fisher Scientific Inc. (NYSE:TMO) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few money managers who sold off their entire stakes in the second quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group sold off the biggest investment of the 750 funds tracked by Insider Monkey, comprising close to $82.2 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dropped about $22.8 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 7 funds in the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Thermo Fisher Scientific Inc. (NYSE:TMO) but similarly valued. We will take a look at AstraZeneca plc (NYSE:AZN), Amgen, Inc. (NASDAQ:AMGN), China Mobile Limited (NYSE:CHL), McDonald’s Corporation (NYSE:MCD), Accenture Plc (NYSE:ACN), Costco Wholesale Corporation (NASDAQ:COST), and Bristol Myers Squibb Company (NYSE:BMY). All of these 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 56.6 hedge funds with bullish positions and the average amount invested in these stocks was $2563 million. That figure was $4526 million in TMO’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 9 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 50.6. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but still beat the market by 20.6 percentage points. Hedge funds were also right about betting on TMO as the stock returned 15.8% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.