How do we determine whether Stryker Corporation (NYSE:SYK) 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.
Stryker Corporation (NYSE:SYK) investors should pay attention to an increase in hedge fund interest recently. SYK was in 33 hedge funds’ portfolios at the end of the third quarter of 2019. There were 30 hedge funds in our database with SYK holdings at the end of the previous quarter. 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 below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Phill Gross of Adage Capital Management
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. We’re going to go over the fresh hedge fund action encompassing Stryker Corporation (NYSE:SYK).
How have hedgies been trading Stryker Corporation (NYSE:SYK)?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SYK over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, GQG Partners held the most valuable stake in Stryker Corporation (NYSE:SYK), which was worth $132 million at the end of the third quarter. On the second spot was Adage Capital Management which amassed $84.3 million worth of shares. AQR Capital Management, GuardCap Asset Management, and Partner Fund 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 GuardCap Asset Management allocated the biggest weight to Stryker Corporation (NYSE:SYK), around 3.42% of its portfolio. Sivik Global Healthcare is also relatively very bullish on the stock, earmarking 2.73 percent of its 13F equity portfolio to SYK.
Now, some big names have jumped into Stryker Corporation (NYSE:SYK) headfirst. Columbus Circle Investors, managed by Principal Global Investors, initiated the biggest position in Stryker Corporation (NYSE:SYK). Columbus Circle Investors had $16.5 million invested in the company at the end of the quarter. Bruce Kovner’s Caxton Associates also initiated a $5.7 million position during the quarter. The following funds were also among the new SYK investors: Benjamin A. Smith’s Laurion Capital Management, Jeffrey Talpins’s Element Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Stryker Corporation (NYSE:SYK) but similarly valued. We will take a look at Gilead Sciences, Inc. (NASDAQ:GILD), Mondelez International Inc (NASDAQ:MDLZ), General Electric Company (NYSE:GE), and Altria Group Inc (NYSE:MO). This group of stocks’ market valuations resemble SYK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GILD | 58 | 3262691 | 1 |
| MDLZ | 52 | 2813252 | 5 |
| GE | 51 | 4455114 | -5 |
| MO | 47 | 1364557 | 9 |
| Average | 52 | 2973904 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 52 hedge funds with bullish positions and the average amount invested in these stocks was $2974 million. That figure was $527 million in SYK’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand Altria Group Inc (NYSE:MO) is the least popular one with only 47 bullish hedge fund positions. Compared to these stocks Stryker Corporation (NYSE:SYK) is even less popular than MO. Hedge funds dodged a bullet by taking a bearish stance towards SYK. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SYK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SYK investors were disappointed as the stock returned -5.3% during the fourth quarter (through the end of November) 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 so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
