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Was The Smart Money Right About Becton, Dickinson and Company (BDX)?

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·6 min read
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In this article you are going to find out whether hedge funds think Becton, Dickinson and Company (NYSE:BDX) 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.

Is Becton, Dickinson and Company (NYSE:BDX) the right pick for your portfolio? The best stock pickers were getting more optimistic. The number of bullish hedge fund positions moved up by 3 recently. Becton, Dickinson and Company (NYSE:BDX) was in 65 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 62. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BDX isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

David Blood
David Blood

David Blood of Generation Investment Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's review the latest hedge fund action surrounding Becton, Dickinson and Company (NYSE:BDX).

Do Hedge Funds Think BDX Is A Good Stock To Buy Now?

At Q4's end, a total of 65 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the third quarter of 2020. By comparison, 50 hedge funds held shares or bullish call options in BDX a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Terry Smith's Fundsmith LLP has the biggest position in Becton, Dickinson and Company (NYSE:BDX), worth close to $1.0873 billion, amounting to 3.6% of its total 13F portfolio. The second most bullish fund manager is Generation Investment Management, led by David Blood and Al Gore, holding a $962.3 million position; 4.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions encompass William von Mueffling's Cantillon Capital Management, Barry Dargan's Intermede Investment Partners and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Columbus Point allocated the biggest weight to Becton, Dickinson and Company (NYSE:BDX), around 6.6% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, setting aside 6.25 percent of its 13F equity portfolio to BDX.

As one would reasonably expect, some big names were leading the bulls' herd. Viking Global, managed by Andreas Halvorsen, created the most valuable position in Becton, Dickinson and Company (NYSE:BDX). Viking Global had $128 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $56.8 million investment in the stock during the quarter. The other funds with brand new BDX positions are Steve Cohen's Point72 Asset Management, Renaissance Technologies, and Joseph Sirdevan's Galibier Capital Management.

Let's now review hedge fund activity in other stocks similar to Becton, Dickinson and Company (NYSE:BDX). These stocks are KE Holdings Inc (NYSE:BEKE), Infosys Limited (NYSE:INFY), Activision Blizzard, Inc. (NASDAQ:ATVI), China Petroleum & Chemical Corp (NYSE:SNP), U.S. Bancorp (NYSE:USB), Chubb Limited (NYSE:CB), and BP plc (NYSE:BP). This group of stocks' market values resemble BDX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BEKE,30,2038963,2 INFY,23,1755104,1 ATVI,81,3739018,-12 SNP,13,196413,5 USB,60,8134585,12 CB,34,1188375,-11 BP,29,927478,-1 Average,38.6,2568562,-0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $2569 million. That figure was $3961 million in BDX's case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 13 bullish hedge fund positions. Becton, Dickinson and Company (NYSE:BDX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BDX is 76.2. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately BDX wasn't nearly as popular as these 30 stocks and hedge funds that were betting on BDX were disappointed as the stock returned 3.5% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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