After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Baxter International Inc. (NYSE:BAX).
Is Baxter International Inc. (NYSE:BAX) worth your attention right now? Hedge funds are taking a bearish view. The number of bullish hedge fund positions shrunk by 7 lately. Our calculations also showed that BAX isn’t among the 30 most popular stocks among hedge funds.
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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s go over the new hedge fund action surrounding Baxter International Inc. (NYSE:BAX).
What have hedge funds been doing with Baxter International Inc. (NYSE:BAX)?
At Q4’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from one quarter earlier. On the other hand, there were a total of 48 hedge funds with a bullish position in BAX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Third Point was the largest shareholder of Baxter International Inc. (NYSE:BAX), with a stake worth $1843 million reported as of the end of September. Trailing Third Point was AQR Capital Management, which amassed a stake valued at $336.4 million. Point72 Asset Management, Healthcor Management LP, and Starboard Value LP were also very fond of the stock, giving the stock large weights in their portfolios.
Since Baxter International Inc. (NYSE:BAX) has witnessed declining sentiment from the smart money, it’s safe to say that there exists a select few funds who were dropping their full holdings in the third quarter. Intriguingly, Aaron Cowen’s Suvretta Capital Management sold off the biggest stake of all the hedgies tracked by Insider Monkey, worth about $238 million in stock, and Brian Ashford-Russell and Tim Woolley’s Polar Capital was right behind this move, as the fund said goodbye to about $61.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 7 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Baxter International Inc. (NYSE:BAX) but similarly valued. These stocks are Aon plc (NYSE:AON), Altaba Inc. (NASDAQ:AABA), American International Group Inc (NYSE:AIG), and AFLAC Incorporated (NYSE:AFL). All of these stocks’ market caps are closest to BAX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AON | 40 | 2187808 | 10 |
| AABA | 73 | 12595295 | -14 |
| AIG | 39 | 1852935 | -2 |
| AFL | 27 | 861835 | -2 |
| Average | 44.75 | 4374468 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.75 hedge funds with bullish positions and the average amount invested in these stocks was $4374 million. That figure was $3121 million in BAX’s case. Altaba Inc. (NASDAQ:AABA) is the most popular stock in this table. On the other hand AFLAC Incorporated (NYSE:AFL) is the least popular one with only 27 bullish hedge fund positions. Baxter International Inc. (NYSE:BAX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on BAX, though not to the same extent, as the stock returned 17.2% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
