Should You Buy DENTSPLY International Inc. (XRAY)?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards DENTSPLY International Inc. (NASDAQ:XRAY).

DENTSPLY International Inc. (NASDAQ:XRAY) was in 29 hedge funds’ portfolios at the end of the third quarter of 2015. XRAY shareholders have witnessed an increase in hedge fund interest in recent months. There were 21 hedge funds in our database with XRAY holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The WhiteWave Foods Co (NYSE:WWAV), Torchmark Corporation (NYSE:TMK), and CDW Corp (NASDAQ:CDW) to gather more data points.

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In the 21st-century investor’s toolkit, there are many gauges shareholders use to grade stocks. A duo of the less known gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the market by a solid amount (see the details here).

With all of this in mind, let’s go over the key action encompassing DENTSPLY International Inc. (NASDAQ:XRAY).

What does the smart money think about DENTSPLY International Inc. (NASDAQ:XRAY)?

At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the number one position in DENTSPLY International Inc. (NASDAQ:XRAY), worth close to $541.3 million, amounting to 5.2% of its total 13F portfolio. The second largest stake is held by Anand Parekh of Alyeska Investment Group, with a $73.5 million position; 0.9% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions consist of Ken Griffin’s Citadel Investment Group, David Harding’s Winton Capital Management and Israel Englander’s Millennium Management.

Consequently, key money managers were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, assembled the biggest position in DENTSPLY International Inc. (NASDAQ:XRAY). GLG Partners had $15.2 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also initiated a $13.9 million position during the quarter. The following funds were also among the new XRAY investors: John Overdeck and David Siegel’s Two Sigma Advisors, Andreas Halvorsen’s Viking Global, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now review hedge fund activity in other stocks similar to DENTSPLY International Inc. (NASDAQ:XRAY). We will take a look at The WhiteWave Foods Co (NYSE:WWAV), Torchmark Corporation (NYSE:TMK), CDW Corp (NASDAQ:CDW), and Brixmor Property Group Inc (NYSE:BRX). This group of stocks’ market caps match XRAY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WWAV 33 690741 3
TMK 24 547957 10
CDW 29 510900 2
BRX 9 95058 -5

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $461 million. That figure was $807 million in XRAY’s case. The WhiteWave Foods Co (NYSE:WWAV) is the most popular stock in this table. On the other hand Brixmor Property Group Inc (NYSE:BRX) is the least popular one with only 9 bullish hedge fund positions. DENTSPLY International Inc. (NASDAQ:XRAY) 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 most collectively bullish on. In this regard, WWAV might be a better candidate to consider a long position.