Were Hedge Funds Right About Qiagen NV (QGEN)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Qiagen NV (NYSE:QGEN) in this article.

Is Qiagen NV (NYSE:QGEN) going to take off soon? The best stock pickers are becoming more confident. The number of long hedge fund bets advanced by 27 in recent months. Our calculations also showed that QGEN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). QGEN was in 51 hedge funds’ portfolios at the end of December. There were 24 hedge funds in our database with QGEN positions at the end of the previous quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Phill Gross of Adage Capital Management

Keeping this in mind let’s view the latest hedge fund action surrounding Qiagen NV (NYSE:QGEN).

What does smart money think about Qiagen NV (NYSE:QGEN)?

Heading into the first quarter of 2020, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 113% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in QGEN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Qiagen NV (NYSE:QGEN). Citadel Investment Group has a $75.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Farallon Capital, with a $72.8 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, D. E. Shaw’s D E Shaw and Clint Carlson’s Carlson Capital. In terms of the portfolio weights assigned to each position Twin Capital Management allocated the biggest weight to Qiagen NV (NYSE:QGEN), around 13.2% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, designating 5.49 percent of its 13F equity portfolio to QGEN.

As aggregate interest increased, key money managers were breaking ground themselves. Farallon Capital, established the most outsized position in Qiagen NV (NYSE:QGEN). Farallon Capital had $72.8 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $37.2 million position during the quarter. The other funds with brand new QGEN positions are Clint Carlson’s Carlson Capital, Zach Schreiber’s Point State Capital, and Carl Tiedemann and Michael Tiedemann’s TIG Advisors.

Let’s go over hedge fund activity in other stocks similar to Qiagen NV (NYSE:QGEN). We will take a look at Hill-Rom Holdings, Inc. (NYSE:HRC), Levi Strauss & Co. (NYSE:LEVI), Spirit AeroSystems Holdings, Inc. (NYSE:SPR), and The Stars Group Inc. (NASDAQ:TSG). All of these stocks’ market caps are closest to QGEN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HRC 27 793647 -2
LEVI 11 34219 1
SPR 48 1874707 9
TSG 45 1366436 11
Average 32.75 1017252 4.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1017 million. That figure was $585 million in QGEN’s case. Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is the most popular stock in this table. On the other hand Levi Strauss & Co. (NYSE:LEVI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Qiagen NV (NYSE:QGEN) is more popular among hedge funds. 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 returned 1.3% in 2020 through May 1st but still managed to beat the market by 12.9 percentage points. Hedge funds were also right about betting on QGEN as the stock returned 23.3% so far in 2020 (through May 1st) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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