We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Steris Plc (NYSE:STE). Currently there is one ETF with at least 10% weight in STE: VanEck Vectors Environmental Services ETF (NYSE:EVX).
Is Steris Plc (NYSE:STE) an attractive investment now? The best stock pickers are in a bullish mood. The number of long hedge fund positions went up by 6 lately. Our calculations also showed that STE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). STE was in 28 hedge funds’ portfolios at the end of the third quarter of 2019. There were 22 hedge funds in our database with STE positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a lot of metrics stock market investors employ to grade stocks. A couple of the most useful metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite money managers can outclass their index-focused peers by a solid amount (see the details here).
Noam Gottesman of GLG Partners
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the recent hedge fund action surrounding Steris Plc (NYSE:STE).
How have hedgies been trading Steris Plc (NYSE:STE)?
Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the second quarter of 2019. On the other hand, there were a total of 21 hedge funds with a bullish position in STE a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in Steris Plc (NYSE:STE), which was worth $155 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $27.5 million worth of shares. GLG Partners, Renaissance Technologies, and Millennium 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 Welch Capital Partners allocated the biggest weight to Steris Plc (NYSE:STE), around 1.42% of its portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.85 percent of its 13F equity portfolio to STE.
Consequently, key hedge funds have been driving this bullishness. Renaissance Technologies, initiated the largest position in Steris Plc (NYSE:STE). Renaissance Technologies had $26.2 million invested in the company at the end of the quarter. Robert Joseph Caruso’s Select Equity Group also made a $19.6 million investment in the stock during the quarter. The other funds with brand new STE positions are David E. Shaw’s D E Shaw, Israel Englander’s Millennium Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s go over hedge fund activity in other stocks similar to Steris Plc (NYSE:STE). We will take a look at Paycom Software Inc (NYSE:PAYC), Liberty Global Plc (NASDAQ:LBTYK), Fidelity National Financial Inc (NYSE:FNF), and Equity Lifestyle Properties, Inc. (NYSE:ELS). All of these stocks’ market caps match STE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAYC | 31 | 413981 | 7 |
| LBTYK | 38 | 3404866 | 4 |
| FNF | 28 | 340609 | -1 |
| ELS | 19 | 521910 | 1 |
| Average | 29 | 1170342 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1170 million. That figure was $389 million in STE’s case. Liberty Global Plc (NASDAQ:LBTYK) is the most popular stock in this table. On the other hand Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 19 bullish hedge fund positions. Steris Plc (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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately STE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); STE investors were disappointed as the stock returned 4.9% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
