Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Baxter International Inc. (NYSE:BAX) a good investment right now? The best stock pickers are getting more optimistic. The number of bullish hedge fund positions improved by 12 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as T. Rowe Price Group, Inc. (NASDAQ:TROW), St. Jude Medical, Inc. (NYSE:STJ), and Analog Devices, Inc. (NASDAQ:ADI) to gather more data points.
Follow Baxter International Inc (NYSE:BAX)
Follow Baxter International Inc (NYSE:BAX)
In the 21st century investor’s toolkit there are tons of tools investors use to evaluate stocks. A duo of the less known tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the broader indices by a significant amount (see the details here).
Now, we’re going to review the new action encompassing Baxter International Inc. (NYSE:BAX).
What have hedge funds been doing with Baxter International Inc. (NYSE:BAX)?
Heading into Q4, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Third Point, managed by Dan Loeb, holds the biggest position in Baxter International Inc. (NYSE:BAX). Third Point has a $1.769 billion position in the stock, comprising 16.7% of its 13F portfolio. Some other hedge funds and institutional investors that are bullish contain Barry Rosenstein’s JANA Partners and James Dinan’s York Capital Management.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Baxter International Inc. (NYSE:BAX) headfirst. JANA Partners established the most valuable position in Baxter International Inc. (NYSE:BAX). JANA Partners had $413.3 million invested in the company at the end of the quarter. Jeffrey Smith’s Starboard Value LP also made a $41.1 million investment in the stock during the quarter. The other funds with brand new BAX positions are Daniel S. Och’s OZ Management, Clint Carlson’s Carlson Capital, and Peter Muller’s PDT Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Baxter International Inc. (NYSE:BAX) but similarly valued. We will take a look at T. Rowe Price Group, Inc. (NASDAQ:TROW), St. Jude Medical, Inc. (NYSE:STJ), Analog Devices, Inc. (NASDAQ:ADI), and Spectra Energy Corp. (NYSE:SE). All of these stocks’ market caps are similar to BAX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TROW | 26 | 516235 | -3 |
| STJ | 41 | 599886 | 0 |
| ADI | 32 | 1189511 | 5 |
| SE | 24 | 146526 | 2 |
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $613 million. On the other hand, hedge funds have amassed a total of $5.37 billion worth of BAX’s shares. St. Jude Medical, Inc. (NYSE:STJ) is the most popular stock in this table with 41 funds reporting stakes, while Spectra Energy Corp. (NYSE:SE) is the least popular one. Compared to these stocks, Baxter International Inc. (NYSE:BAX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
