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Hedge Fund Consensus Stocks vs. Stryker Corporation (SYK) In 2019

Debasis Saha

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds' top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Stryker Corporation (NYSE:SYK).

Stryker Corporation (NYSE:SYK) was in 33 hedge funds' portfolios at the end of September. SYK investors should be aware of an increase in support from the world's most elite money managers lately. There were 30 hedge funds in our database with SYK holdings at the end of the previous quarter. Our calculations also showed that SYK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In today’s marketplace there are numerous methods shareholders use to appraise stocks. Some of the less utilized methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can trounce their index-focused peers by a significant amount (see the details here).

[caption id="attachment_340081" align="alignnone" width="600"] Phill Gross of Adage Capital Management[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to analyze the recent hedge fund action surrounding Stryker Corporation (NYSE:SYK).

How have hedgies been trading Stryker Corporation (NYSE:SYK)?

Heading into the fourth quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the second quarter of 2019. By comparison, 44 hedge funds held shares or bullish call options in SYK a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is SYK A Good Stock To Buy?

The largest stake in Stryker Corporation (NYSE:SYK) was held by GQG Partners, which reported holding $132 million worth of stock at the end of September. It was followed by Adage Capital Management with a $84.3 million position. Other investors bullish on the company included AQR Capital Management, GuardCap Asset Management, and Partner Fund Management. In terms of the portfolio weights assigned to each position GuardCap Asset Management allocated the biggest weight to Stryker Corporation (NYSE:SYK), around 3.42% of its 13F portfolio. Sivik Global Healthcare is also relatively very bullish on the stock, designating 2.73 percent of its 13F equity portfolio to SYK.

With a general bullishness amongst the heavyweights, key money managers have jumped into Stryker Corporation (NYSE:SYK) headfirst. Columbus Circle Investors, managed by Principal Global Investors, assembled the largest position in Stryker Corporation (NYSE:SYK). Columbus Circle Investors had $16.5 million invested in the company at the end of the quarter. Bruce Kovner's Caxton Associates also made a $5.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith's Laurion Capital Management, Jeffrey Talpins's Element Capital Management, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..

Let's now take a look at hedge fund activity in other stocks similar to Stryker Corporation (NYSE:SYK). These stocks are Gilead Sciences, Inc. (NASDAQ:GILD), Mondelez International Inc (NASDAQ:MDLZ), General Electric Company (NYSE:GE), and Altria Group Inc (NYSE:MO). All of these stocks' market caps match SYK's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GILD,58,3262691,1 MDLZ,52,2813252,5 GE,51,4455114,-5 MO,47,1364557,9 Average,52,2973904,2.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 52 hedge funds with bullish positions and the average amount invested in these stocks was $2974 million. That figure was $527 million in SYK's case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand Altria Group Inc (NYSE:MO) is the least popular one with only 47 bullish hedge fund positions. Compared to these stocks Stryker Corporation (NYSE:SYK) is even less popular than MO. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on SYK, though not to the same extent, as the stock returned 36.6% in 2019 (through 12/23) and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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