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Were Hedge Funds Right About Piling Into Hologic, Inc. (HOLX)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Hologic, Inc. (NASDAQ:HOLX) based on that data and determine whether they were really smart about the stock.

Hologic, Inc. (NASDAQ:HOLX) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 41 hedge funds’ portfolios at the end of March. At the end of this article we will also compare HOLX to other stocks including Wabtec Corporation (NYSE:WAB), Enel Americas S.A. (NYSE:ENIA), and NetApp Inc. (NASDAQ:NTAP) to get a better sense of its popularity.

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Andrew Sandler of Sandler Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the new hedge fund action surrounding Hologic, Inc. (NASDAQ:HOLX).

Hedge fund activity in Hologic, Inc. (NASDAQ:HOLX)

At Q1’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HOLX over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Larry Robbins’s Glenview Capital has the biggest position in Hologic, Inc. (NASDAQ:HOLX), worth close to $137.3 million, corresponding to 3.7% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $106.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish comprise D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Endurant Capital Management allocated the biggest weight to Hologic, Inc. (NASDAQ:HOLX), around 7.53% of its 13F portfolio. Tamarack Capital Management is also relatively very bullish on the stock, setting aside 5.05 percent of its 13F equity portfolio to HOLX.

Since Hologic, Inc. (NASDAQ:HOLX) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that elected to cut their positions entirely heading into Q4. Intriguingly, Anand Parekh’s Alyeska Investment Group dumped the biggest stake of all the hedgies watched by Insider Monkey, valued at about $35.9 million in stock. Matthew L Pinz’s fund, Pinz Capital, also sold off its stock, about $2.3 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 go over hedge fund activity in other stocks similar to Hologic, Inc. (NASDAQ:HOLX). We will take a look at Wabtec Corporation (NYSE:WAB), Enel Americas S.A. (NYSE:ENIA), NetApp Inc. (NASDAQ:NTAP), and Ubiquiti Inc. (NYSE:UI). This group of stocks’ market valuations are similar to HOLX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WAB 41 1405445 0
ENIA 7 102191 -1
NTAP 26 335752 -1
UI 23 162047 -2
Average 24.25 501359 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $501 million. That figure was $866 million in HOLX’s case. Wabtec Corporation (NYSE:WAB) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 7 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 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on HOLX as the stock returned 62.4% in Q2 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.