How do we determine whether Steris Plc (NYSE:STE) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Steris Plc (NYSE:STE) was in 22 hedge funds' portfolios at the end of the second quarter of 2019. STE investors should be aware of an increase in activity from the world's largest hedge funds in recent months. There were 21 hedge funds in our database with STE holdings at the end of the previous quarter. Our calculations also showed that STE isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most investors, hedge funds are seen as slow, outdated investment tools of years past. While there are more than 8000 funds with their doors open today, Our researchers hone in on the masters of this group, about 750 funds. Most estimates calculate that this group of people oversee the majority of the smart money's total asset base, and by paying attention to their unrivaled investments, Insider Monkey has unsheathed a few investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's review the recent hedge fund action encompassing Steris Plc (NYSE:STE).
How are hedge funds trading Steris Plc (NYSE:STE)?
At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in STE over the last 16 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Steris Plc (NYSE:STE). Fisher Asset Management has a $161.8 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Greg Poole of Echo Street Capital Management, with a $22.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Paul Marshall and Ian Wace's Marshall Wace LLP, Noam Gottesman's GLG Partners and Mario Gabelli's GAMCO Investors.
As aggregate interest increased, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Steris Plc (NYSE:STE). Marshall Wace LLP had $22.3 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also initiated a $11.8 million position during the quarter. The other funds with brand new STE positions are Steve Cohen's Point72 Asset Management, Matthew Tewksbury's Stevens Capital Management, and Brad Dunkley and Blair Levinsky's Waratah Capital Advisors.
Let's now take a look at hedge fund activity in other stocks similar to Steris Plc (NYSE:STE). These stocks are Teck Resources Ltd (NYSE:TECK), Varian Medical Systems, Inc. (NYSE:VAR), CenturyLink, Inc. (NYSE:CTL), and Godaddy Inc (NYSE:GDDY). This group of stocks' market caps are closest to STE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TECK,23,915558,-4 VAR,25,621271,-7 CTL,27,1040787,-5 GDDY,44,2553762,-4 Average,29.75,1282845,-5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $1283 million. That figure was $287 million in STE's case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Teck Resources Ltd (NYSE:TECK) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Steris Plc (NYSE:STE) is even less popular than TECK. Hedge funds dodged a bullet by taking a bearish stance towards STE. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately STE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); STE investors were disappointed as the stock returned -2.7% during the third 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.