Is Steris Corp (NYSE:STE) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is STERIS Corp (NYSE:STE) a superb investment today? Prominent investors are in a bearish mood. The number of long hedge fund bets decreased by 1 in recent months. STE was in 23 hedge funds’ portfolios at the end of September. There were 24 hedge funds in our database with STE holdings at the end of the previous quarter. 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 ON Semiconductor Corp (NASDAQ:ON), USG Corporation (NYSE:USG), and The Toro Company (NYSE:TTC) to gather more data points.
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With all of this in mind, let’s take a gander at the fresh action encompassing STERIS Corp (NYSE:STE).
How have hedgies been trading STERIS Corp (NYSE:STE)?
Heading into Q4, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the biggest position in STERIS Corp (NYSE:STE), worth close to $105.3 million, corresponding to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Iridian Asset Management, led by David Cohen and Harold Levy, holding a $89.3 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions comprise Chuck Royce’s Royce & Associates, Jim Simons’ Renaissance Technologies and Steve Cohen’s Point72 Asset Management.
Since STERIS Corp (NYSE:STE) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their positions entirely last quarter. Intriguingly, Glenn Russell Dubin’s Highbridge Capital Management sold off the largest position of the 700 funds monitored by Insider Monkey, comprising about $8.8 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $2.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as STERIS Corp (NYSE:STE) but similarly valued. These stocks are ON Semiconductor Corp (NASDAQ:ON), USG Corporation (NYSE:USG), The Toro Company (NYSE:TTC), and Hospitality Properties Trust (NYSE:HPT). All of these stocks’ market caps are closest to STE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ON | 29 | 563525 | -11 |
| USG | 28 | 1221249 | -1 |
| TTC | 21 | 184000 | -1 |
| HPT | 17 | 77923 | 1 |
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $512 million. That figure was $352 million in STE’s case. ON Semiconductor Corp (NASDAQ:ON) is the most popular stock in this table. On the other hand Hospitality Properties Trust (NYSE:HPT) is the least popular one with only 17 bullish hedge fund positions. STERIS Corp (NYSE:STE) 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. In this regard ON might be a better candidate to consider a long position.
