Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Medtronic plc (NYSE:MDT).
Medtronic plc (NYSE:MDT) was in 68 hedge funds’ portfolios at the end of June. The all time high for this statistic is 66. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MDT investors should be aware of an increase in support from the world’s most elite money managers recently. There were 65 hedge funds in our database with MDT positions at the end of the first quarter. Our calculations also showed that MDT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 79 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.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the new hedge fund action encompassing Medtronic plc (NYSE:MDT).
Do Hedge Funds Think MDT Is A Good Stock To Buy Now?
At the end of June, a total of 68 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MDT over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Diamond Hill Capital held the most valuable stake in Medtronic plc (NYSE:MDT), which was worth $571.1 million at the end of the second quarter. On the second spot was Two Sigma Advisors which amassed $407.9 million worth of shares. D E Shaw, Fisher Asset Management, 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 Tri Locum Partners allocated the biggest weight to Medtronic plc (NYSE:MDT), around 11.42% of its 13F portfolio. Antipodes Partners is also relatively very bullish on the stock, setting aside 4.69 percent of its 13F equity portfolio to MDT.
As one would reasonably expect, specific money managers have jumped into Medtronic plc (NYSE:MDT) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Medtronic plc (NYSE:MDT). Arrowstreet Capital had $87.3 million invested in the company at the end of the quarter. Joseph Edelman’s Perceptive Advisors also initiated a $55.9 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Renaissance Technologies, and D. E. Shaw’s D E Shaw.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Medtronic plc (NYSE:MDT) but similarly valued. These stocks are SAP SE (NYSE:SAP), QUALCOMM, Incorporated (NASDAQ:QCOM), Pinduoduo Inc. (NASDAQ:PDD), AstraZeneca plc (NYSE:AZN), Philip Morris International Inc. (NYSE:PM), Royal Dutch Shell plc (NYSE:RDS), and The Unilever Group (NYSE:UL). This group of stocks’ market values match MDT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAP | 17 | 1603691 | -2 |
| QCOM | 72 | 4047519 | -1 |
| PDD | 49 | 5276960 | -7 |
| AZN | 37 | 2772286 | 3 |
| PM | 46 | 5973614 | -2 |
| RDS | 38 | 2444791 | 2 |
| UL | 19 | 844216 | -1 |
| Average | 39.7 | 3280440 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.7 hedge funds with bullish positions and the average amount invested in these stocks was $3280 million. That figure was $3391 million in MDT’s case. QUALCOMM, Incorporated (NASDAQ:QCOM) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 17 bullish hedge fund positions. Medtronic plc (NYSE:MDT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MDT is 84.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on MDT, though not to the same extent, as the stock returned 4.2% since Q2 (through September 27th) and outperformed the market as well.
Follow Medtronic Inc (Old Filings) (NYSE:MDT)
Follow Medtronic Inc (Old Filings) (NYSE:MDT)
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Disclosure: None. This article was originally published at Insider Monkey.
