At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Steris Plc (NYSE:STE).
Is Steris Plc (NYSE:STE) going to take off soon? Hedge funds are taking an optimistic view. The number of bullish hedge fund positions rose by 2 lately. Our calculations also showed that STE isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
According to most investors, hedge funds are viewed as unimportant, outdated investment tools of yesteryear. While there are more than 8000 funds trading today, We hone in on the bigwigs of this club, around 850 funds. These investment experts shepherd the majority of the hedge fund industry's total capital, and by paying attention to their unrivaled stock picks, Insider Monkey has unearthed several investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_673876" align="aligncenter" width="400"] John Overdeck of Two Sigma Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to review the fresh hedge fund action regarding Steris Plc (NYSE:STE).
What have hedge funds been doing with Steris Plc (NYSE:STE)?
At the end of the first quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STE over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Select Equity Group held the most valuable stake in Steris Plc (NYSE:STE), which was worth $266.3 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $113.6 million worth of shares. Echo Street Capital Management, AQR Capital Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Aubrey Capital Management allocated the biggest weight to Steris Plc (NYSE:STE), around 2.63% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, dishing out 1.84 percent of its 13F equity portfolio to STE.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Sandler Capital Management, managed by Andrew Sandler, established the most outsized position in Steris Plc (NYSE:STE). Sandler Capital Management had $5.7 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also initiated a $1.4 million position during the quarter. The other funds with brand new STE positions are Dipak Patel's Alight Capital, Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, and Adam Usdan's Trellus Management Company.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Steris Plc (NYSE:STE) but similarly valued. These stocks are CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Rollins, Inc. (NYSE:ROL), Alliant Energy Corporation (NYSE:LNT), and Martin Marietta Materials, Inc. (NYSE:MLM). This group of stocks' market values resemble STE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRWD,65,1301564,17 ROL,25,447589,-9 LNT,30,602098,2 MLM,44,1436776,-8 Average,41,947007,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $947 million. That figure was $555 million in STE's case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Rollins, Inc. (NYSE:ROL) is the least popular one with only 25 bullish hedge fund positions. Steris Plc (NYSE:STE) is not the least popular stock in this group but hedge fund interest is still below 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on STE, though not to the same extent, as the stock returned 18.5% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.