The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Boston Scientific Corporation (NYSE:BSX)?
Is Boston Scientific Corporation (NYSE:BSX) a sound investment now? The best stock pickers are getting more optimistic. The number of long hedge fund bets inched up by 5 lately. Our calculations also showed that BSX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). BSX was in 59 hedge funds’ portfolios at the end of March. There were 54 hedge funds in our database with BSX holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Andreas Halvorsen of Viking Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding Boston Scientific Corporation (NYSE:BSX).
Hedge fund activity in Boston Scientific Corporation (NYSE:BSX)
Heading into the second quarter of 2020, a total of 59 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BSX over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Boston Scientific Corporation (NYSE:BSX) was held by Viking Global, which reported holding $1038.2 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $282.1 million position. Other investors bullish on the company included OrbiMed Advisors, Suvretta Capital Management, and Steadfast Capital Management. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Boston Scientific Corporation (NYSE:BSX), around 7.57% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, dishing out 6.9 percent of its 13F equity portfolio to BSX.
As aggregate interest increased, key money managers have been driving this bullishness. Steadfast Capital Management, managed by Robert Pitts, established the most outsized position in Boston Scientific Corporation (NYSE:BSX). Steadfast Capital Management had $131.1 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also made a $77.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, James Dinan’s York Capital Management, and Henrik Rhenman’s Rhenman & Partners Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Boston Scientific Corporation (NYSE:BSX) but similarly valued. These stocks are Illinois Tool Works Inc. (NYSE:ITW), Ecolab Inc. (NYSE:ECL), Intercontinental Exchange Inc (NYSE:ICE), and CSX Corporation (NASDAQ:CSX). This group of stocks’ market values are similar to BSX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ITW | 34 | 296563 | 2 |
| ECL | 38 | 1597530 | -6 |
| ICE | 61 | 2491084 | 9 |
| CSX | 57 | 2811477 | 11 |
| Average | 47.5 | 1799164 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.5 hedge funds with bullish positions and the average amount invested in these stocks was $1799 million. That figure was $3081 million in BSX’s case. Intercontinental Exchange Inc (NYSE:ICE) is the most popular stock in this table. On the other hand Illinois Tool Works Inc. (NYSE:ITW) is the least popular one with only 34 bullish hedge fund positions. Boston Scientific Corporation (NYSE:BSX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately BSX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BSX were disappointed as the stock returned 10.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
