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While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Stryker Corporation (NYSE:SYK).
Is SYK a good stock to buy now? Stryker Corporation (NYSE:SYK) has seen a decrease in support from the world's most elite money managers in recent months. Stryker Corporation (NYSE:SYK) was in 48 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 50. 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 for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are many methods market participants have at their disposal to grade their holdings. A couple of the most useful methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a solid amount (see the details here).
Arthur B Cohen and Joseph Healey of Healthcor Management LP
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this cannabis tech stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. With all of this in mind we're going to check out the key hedge fund action encompassing Stryker Corporation (NYSE:SYK).
Do Hedge Funds Think SYK Is A Good Stock To Buy Now?
At the end of September, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SYK over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Stryker Corporation (NYSE:SYK), with a stake worth $507.3 million reported as of the end of September. Trailing Fisher Asset Management was BlueSpruce Investments, which amassed a stake valued at $429.5 million. Steadfast Capital Management, Adage Capital Management, and GuardCap Asset Management 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 BlueSpruce Investments allocated the biggest weight to Stryker Corporation (NYSE:SYK), around 10.09% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, designating 6.7 percent of its 13F equity portfolio to SYK.
Because Stryker Corporation (NYSE:SYK) has witnessed a decline in interest from the smart money, it's easy to see that there was a specific group of funds that decided to sell off their entire stakes in the third quarter. At the top of the heap, Renaissance Technologies said goodbye to the largest position of all the hedgies followed by Insider Monkey, comprising close to $26.5 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund dropped about $10.4 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Stryker Corporation (NYSE:SYK). We will take a look at CVS Health Corporation (NYSE:CVS), Morgan Stanley (NYSE:MS), Canadian National Railway Company (NYSE:CNI), Rio Tinto Group (NYSE:RIO), Sea Limited (NYSE:SE), Prologis Inc (NYSE:PLD), and Square, Inc. (NYSE:SQ). This group of stocks' market caps are closest to SYK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVS,61,1171666,-4 MS,70,4166963,9 CNI,26,2224542,-2 RIO,23,1276002,3 SE,95,7818359,13 PLD,33,518397,-2 SQ,73,6501994,7 Average,54.4,3382560,3.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.4 hedge funds with bullish positions and the average amount invested in these stocks was $3383 million. That figure was $1719 million in SYK's case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 23 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. Our overall hedge fund sentiment score for SYK is 49.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on SYK as the stock returned 13% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.