The latest 13F reporting period has come and gone, and 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. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought The Cooper Companies, Inc. (NYSE:COO) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
The Cooper Companies, Inc. (NYSE:COO) has experienced an increase in hedge fund sentiment in recent months. The Cooper Companies, Inc. (NYSE:COO) was in 34 hedge funds' portfolios at the end of June. The all time high for this statistics is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that COO 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Andreas Halvorsen of Viking Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Now let's check out the key hedge fund action encompassing The Cooper Companies, Inc. (NYSE:COO).
What have hedge funds been doing with The Cooper Companies, Inc. (NYSE:COO)?
At Q2's end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the first quarter of 2020. On the other hand, there were a total of 28 hedge funds with a bullish position in COO a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David Blood and Al Gore's Generation Investment Management has the largest position in The Cooper Companies, Inc. (NYSE:COO), worth close to $567.6 million, comprising 3.3% of its total 13F portfolio. The second most bullish fund manager is Viking Global, managed by Andreas Halvorsen, which holds a $98 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions consist of Cliff Asness's AQR Capital Management, Greg Poole's Echo Street Capital Management and Michael Rockefeller and KarláKroeker's Woodline Partners. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to The Cooper Companies, Inc. (NYSE:COO), around 3.27% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, earmarking 1.59 percent of its 13F equity portfolio to COO.
Consequently, some big names have been driving this bullishness. Echo Street Capital Management, managed by Greg Poole, created the most valuable position in The Cooper Companies, Inc. (NYSE:COO). Echo Street Capital Management had $22.9 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker's Woodline Partners also made a $22.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Seth Cogswell's Running Oak Capital, and Donald Sussman's Paloma Partners.
Let's check out hedge fund activity in other stocks similar to The Cooper Companies, Inc. (NYSE:COO). We will take a look at Warner Music Group Corp. (NASDAQ:WMG), Campbell Soup Company (NYSE:CPB), Essex Property Trust Inc (NYSE:ESS), Teladoc Health, Inc (NYSE:TDOC), Healthpeak Properties, Inc. (NYSE:PEAK), Tiffany & Co. (NYSE:TIF), and Hologic, Inc. (NASDAQ:HOLX). This group of stocks' market caps resemble COO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WMG,31,592226,31 CPB,32,450053,-8 ESS,28,551715,-3 TDOC,44,811816,8 PEAK,23,372112,-3 TIF,64,2401546,-5 HOLX,46,1546938,5 Average,38.3,960915,3.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.3 hedge funds with bullish positions and the average amount invested in these stocks was $961 million. That figure was $876 million in COO's case. Tiffany & Co. (NYSE:TIF) is the most popular stock in this table. On the other hand Healthpeak Properties, Inc. (NYSE:PEAK) is the least popular one with only 23 bullish hedge fund positions. The Cooper Companies, Inc. (NYSE:COO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for COO is 53.4. 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 negative signal and 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately COO wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); COO investors were disappointed as the stock returned 10.8% since Q2 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.