Hedge Funds Are Crazy About Medtronic, Inc. (MDT)

Who’s crazy about Medtronic, Inc. (NYSE:MDT)?

Now, according to many of your fellow readers, hedge funds are perceived as useless, old investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds in operation currently, Insider Monkey aim at the moguls of this club, close to 525 funds. It is assumed that this group oversees most of all hedge funds’ total capital, and by watching their highest performing stock picks, we’ve found a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as necessary, bullish insider trading sentiment is a second way to analyze the financial markets. Just as you’d expect, there are a variety of stimuli for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this strategy if “monkeys” know what to do (learn more here).

Now that that’s out of the way, it’s important to examine the newest info surrounding Medtronic, Inc. (NYSE:MDT).

Hedge fund activity in Medtronic, Inc. (NYSE:MDT)

In preparation for the third quarter, a total of 38 of the hedge funds we track held long positions in this stock, a change of 12% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings meaningfully.

According to our 13F database, Harris Associates, managed by Natixis Global Asset Management, holds the largest position in Medtronic, Inc. (NYSE:MDT). Harris Associates has a $650.8 million position in the stock, comprising 1.4% of its 13F portfolio. Coming in second is Diamond Hill Capital, managed by Ric Dillon, which held a $275.7 million position; 3% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include John A. Levin’s Levin Capital Strategies, Bill Miller’s Legg Mason Capital Management and Cliff Asness’s AQR Capital Management.

With a general bullishness amongst the titans, particular hedge funds were leading the bulls’ herd. Diamond Hill Capital, managed by Ric Dillon, created the most outsized position in Medtronic, Inc. (NYSE:MDT). Diamond Hill Capital had 275.7 million invested in the company at the end of the quarter. John A. Levin’s Levin Capital Strategies also made a $169.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Bill Miller’s Legg Mason Capital Management, Cliff Asness’s AQR Capital Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

What do corporate executives and insiders think about Medtronic, Inc. (NYSE:MDT)?

Insider buying is most useful when the company in question has experienced transactions within the past six months. Over the latest half-year time period, Medtronic, Inc. (NYSE:MDT) has seen 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Medtronic, Inc. (NYSE:MDT). These stocks are St. Jude Medical, Inc. (NYSE:STJ), Zimmer Holdings, Inc. (NYSE:ZMH), Intuitive Surgical, Inc. (NASDAQ:ISRG), Stryker Corporation (NYSE:SYK), and Abbott Laboratories (NYSE:ABT). All of these stocks are in the medical appliances & equipment industry and their market caps are similar to MDT’s market cap.

Using the returns shown by our studies, regular investors should always track hedge fund and insider trading sentiment, and Medtronic, Inc. (NYSE:MDT) is no exception.

Discover how hedge fund piggybacking can benefit you