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In this article you are going to find out whether hedge funds think Stryker Corporation (NYSE:SYK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Stryker Corporation (NYSE:SYK) investors should pay attention to an increase in hedge fund interest of late. Our calculations also showed that SYK 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.
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 44 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Ken Heebner of Capital Growth Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. 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 let's check out the new hedge fund action encompassing Stryker Corporation (NYSE:SYK).
What have hedge funds been doing with Stryker Corporation (NYSE:SYK)?
At Q1's end, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SYK over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Stryker Corporation (NYSE:SYK). Fisher Asset Management has a $216.7 million position in the stock, comprising 0.3% of its 13F portfolio. On Fisher Asset Management's heels is Tim Hurd and Ed Magnus of BlueSpruce Investments, with a $194 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass Phill Gross and Robert Atchinson's Adage Capital Management, Israel Englander's Millennium Management and Samuel Isaly's OrbiMed Advisors. In terms of the portfolio weights assigned to each position BlueSpruce Investments allocated the biggest weight to Stryker Corporation (NYSE:SYK), around 6.59% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, earmarking 6.29 percent of its 13F equity portfolio to SYK.
Now, specific money managers were leading the bulls' herd. BlueSpruce Investments, managed by Tim Hurd and Ed Magnus, established the largest position in Stryker Corporation (NYSE:SYK). BlueSpruce Investments had $194 million invested in the company at the end of the quarter. Samuel Isaly's OrbiMed Advisors also initiated a $61.8 million position during the quarter. The following funds were also among the new SYK investors: Ken Heebner's Capital Growth Management, Stephen Yiu's Blue Whale Capital, and Pasco Alfaro / Richard Tumure's Miura Global Management.
Let's also examine hedge fund activity in other stocks similar to Stryker Corporation (NYSE:SYK). These stocks are Becton, Dickinson and Company (NYSE:BDX), CME Group Inc (NASDAQ:CME), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), and Dominion Energy Inc. (NYSE:D). This group of stocks' market values match SYK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BDX,56,1266617,6 CME,62,2265510,8 VRTX,56,3313662,3 D,34,371177,-3 Average,52,1804242,3.5 [/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 $1804 million. That figure was $903 million in SYK's case. CME Group Inc (NASDAQ:CME) is the most popular stock in this table. On the other hand Dominion Energy Inc. (NYSE:D) is the least popular one with only 34 bullish hedge fund positions. Stryker Corporation (NYSE:SYK) is not the least popular stock in this group but hedge fund interest is still below average. 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 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately SYK wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SYK investors were disappointed as the stock returned 10.6% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.