Was The Smart Money Right About Hologic, Inc. (HOLX)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Hologic, Inc. (NASDAQ:HOLX) based on those filings.

Is Hologic, Inc. (NASDAQ:HOLX) a first-rate stock to buy now? The best stock pickers were cutting their exposure. The number of bullish hedge fund positions were trimmed by 7 recently. Hologic, Inc. (NASDAQ:HOLX) was in 43 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 50. Our calculations also showed that HOLX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

According to most traders, hedge funds are assumed to be slow, outdated investment tools of the past. While there are over 8000 funds trading at present, We choose to focus on the moguls of this group, about 850 funds. It is estimated that this group of investors direct the lion’s share of the hedge fund industry’s total asset base, and by following their top picks, Insider Monkey has deciphered a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

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Larry Robbins of Glenview Capital

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. With all of this in mind let’s take a gander at the recent hedge fund action surrounding Hologic, Inc. (NASDAQ:HOLX).

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

At the end of the fourth quarter, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 41 hedge funds with a bullish position in HOLX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is HOLX A Good Stock To Buy?

The largest stake in Hologic, Inc. (NASDAQ:HOLX) was held by D E Shaw, which reported holding $112.3 million worth of stock at the end of December. It was followed by Healthcor Management LP with a $74.1 million position. Other investors bullish on the company included Two Sigma Advisors, Glenview Capital, and Holocene Advisors. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Hologic, Inc. (NASDAQ:HOLX), around 4.16% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, dishing out 2.86 percent of its 13F equity portfolio to HOLX.

Because Hologic, Inc. (NASDAQ:HOLX) has faced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few fund managers that decided to sell off their full holdings heading into Q1. Intriguingly, Steve Cohen’s Point72 Asset Management dropped the biggest position of all the hedgies monitored by Insider Monkey, worth an estimated $51.8 million in stock, and James E. Flynn’s Deerfield Management was right behind this move, as the fund cut about $25.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 7 funds heading into Q1.

Let’s now take a look at hedge fund activity in other stocks similar to Hologic, Inc. (NASDAQ:HOLX). We will take a look at PagSeguro Digital Ltd. (NYSE:PAGS), Check Point Software Technologies Ltd. (NASDAQ:CHKP), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Restaurant Brands International Inc (NYSE:QSR), Smith & Nephew plc (NYSE:SNN), Amcor plc (NYSE:AMCR), and Ventas, Inc. (NYSE:VTR). This group of stocks’ market caps resemble HOLX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PAGS 25 1840597 1
CHKP 26 775145 -1
SSNC 49 2623844 -5
QSR 39 2406995 6
SNN 12 78652 2
AMCR 19 247795 1
VTR 18 137388 1
Average 26.9 1158631 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $1159 million. That figure was $716 million in HOLX’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 12 bullish hedge fund positions. Hologic, Inc. (NASDAQ:HOLX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOLX is 65.7. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately HOLX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HOLX were disappointed as the stock returned -10% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.