Is Abbott Laboratories (ABT) A Good Stock To Buy?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Abbott Laboratories (NYSE:ABT) from the perspective of those elite funds.

Is Abbott Laboratories (NYSE:ABT) a sound investment today? The best stock pickers are becoming more confident. The number of bullish hedge fund bets went up by 6 recently. ABT was in 55 hedge funds’ portfolios at the end of the third quarter of 2015. There were 49 hedge funds in our database with ABT positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as ConocoPhillips (NYSE:COP), Danaher Corporation (NYSE:DHR), and Colgate-Palmolive Company (NYSE:CL) to gather more data points.

Today there are several tools that stock market investors have at their disposal to analyze publicly traded companies. A duo of the less utilized tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the broader indices by a superb margin (see the details here).

With all of this in mind, we’re going to check out the recent action surrounding Abbott Laboratories (NYSE:ABT).

How have hedgies been trading Abbott Laboratories (NYSE:ABT)?

At Q3’s end, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in Abbott Laboratories (NYSE:ABT). Pzena Investment Management has an $208.7 million position in the stock, comprising 1.3% of its 13F portfolio. On Pzena Investment Management’s heels is Cliff Asness of AQR Capital Management, with an $152.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of Dmitry Balyasny’s Balyasny Asset Management, Arthur B Cohen and Joseph Healey’s Healthcor Management LP and Phill Gross and Robert Atchinson’s Adage Capital Management.

Now, some big names were leading the bulls’ herd. Balyasny Asset Management initiated the biggest position in Abbott Laboratories (NYSE:ABT). Balyasny Asset Management had $94.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made an $78 million investment in the stock during the quarter. The following funds were also among the new ABT investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jim Simons’s Renaissance Technologies, and Matthew Tewksbury’s Stevens Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Abbott Laboratories (NYSE:ABT). These stocks are ConocoPhillips (NYSE:COP), Danaher Corporation (NYSE:DHR), Colgate-Palmolive Company (NYSE:CL), and Simon Property Group, Inc (NYSE:SPG). This group of stocks’ market values are similar to ABT’s market value.

As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $1.55 billion. That figure was $2.08 billion in ABT’s case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand Simon Property Group, Inc (NYSE:SPG) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks Abbott Laboratories (NYSE:ABT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.