Is Danaher Corporation (DHR) A Good Stock To Buy ?

Nina Todic

Sat, Nov 30, 2019, 5:00 PM

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Danaher Corporation (NYSE:DHR).

Is Danaher Corporation (NYSE:DHR) a buy right now? Money managers are taking a bearish view. The number of bullish hedge fund bets were cut by 1 recently. Our calculations also showed that DHR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are tons of metrics market participants employ to grade publicly traded companies. A pair of the most innovative metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outclass the S&P 500 by a healthy amount (see the details here).

[caption id="attachment_25086" align="aligncenter" width="450"]

Dan Loeb of Third Point[/caption]

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's go over the recent hedge fund action regarding Danaher Corporation (NYSE:DHR).

What does smart money think about Danaher Corporation (NYSE:DHR)?

At Q3's end, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in DHR over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Dan Loeb's Third Point has the most valuable position in Danaher Corporation (NYSE:DHR), worth close to $535.8 million, corresponding to 6.4% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, led by Cliff Asness, holding a $372.3 million position; 0.4% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish contain Charles Akre's Akre Capital Management, Ian Simm's Impax Asset Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to Danaher Corporation (NYSE:DHR), around 8.07% of its portfolio. Circle Road Advisors is also relatively very bullish on the stock, setting aside 6.54 percent of its 13F equity portfolio to DHR.

Due to the fact that Danaher Corporation (NYSE:DHR) has witnessed a decline in interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers who were dropping their positions entirely last quarter. It's worth mentioning that Anand Parekh's Alyeska Investment Group sold off the largest stake of the 750 funds followed by Insider Monkey, valued at about $64.9 million in stock, and Stephen J. Errico's Locust Wood Capital Advisers was right behind this move, as the fund said goodbye to about $24.1 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let's check out hedge fund activity in other stocks similar to Danaher Corporation (NYSE:DHR). These stocks are United Parcel Service, Inc. (NYSE:UPS), American Express Company (NYSE:AXP), American Tower Corporation (REIT) (NYSE:AMT), and Diageo plc (NYSE:DEO). All of these stocks' market caps are closest to DHR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UPS,41,1365649,5 AXP,48,21377087,3 AMT,46,3645628,4 DEO,22,930335,7 Average,39.25,6829675,4.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.25 hedge funds with bullish positions and the average amount invested in these stocks was $6830 million. That figure was $2732 million in DHR's case. American Express Company (NYSE:AXP) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Danaher Corporation (NYSE:DHR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately DHR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on DHR were disappointed as the stock returned 1.1% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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