Is Becton Dickinson and Co (BDX) A Good Stock To Buy Right Now?

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Becton Dickinson and Co (NYSE:BDX).

Is Becton Dickinson and Co (NYSE:BDX) a healthy stock for your portfolio? Prominent investors are unfortunately turning less bullish. The number of bullish hedge fund positions decreased by 10 in recent months. BDX was in 31 hedge funds’ portfolios at the end of September. There were 41 hedge funds in our database with BDX holdings at the end of the previous quarter. At the end of this article we will also compare BDX to other stocks including Syngenta AG (ADR) (NYSE:SYT), Marsh & McLennan Companies, Inc. (NYSE:MMC), and Yahoo! Inc. (NASDAQ:YHOO) to get a better sense of its popularity. In certain cases a decline in overall hedge fund interest may not be a negative signal.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to analyze the key action regarding Becton Dickinson and Co (NYSE:BDX).

What does the smart money think about Becton Dickinson and Co (NYSE:BDX)?

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 24% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the biggest position in Becton Dickinson and Co (NYSE:BDX). Generation Investment Management has a $218 million position in the stock, comprising 2.4% of its 13F portfolio. On Generation Investment Management’s heels is Alyeska Investment Group, managed by Anand Parekh, which holds a $121.6 million position; 1.2% of its 13F portfolio is allocated to the company. Some other peers with similar optimism encompass Richard Chilton’s Chilton Investment Company, Cliff Asness’ AQR Capital Management and John Brennan’s Sirios Capital Management.

Because Becton Dickinson and Co (NYSE:BDX) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of money managers that slashed their entire stakes in the third quarter. It’s worth mentioning that Christopher James’s fund, Partner Fund Management, said goodbye to its stock, about $39.5 million worth. Quant hedge fund RenTech and Clinton Group, led by George Hall, were among the hedge funds dumping their positions as well.

Let’s now review hedge fund activity in other stocks similar to Becton Dickinson and Co (NYSE:BDX). These stocks are Syngenta AG (ADR) (NYSE:SYT), Marsh & McLennan Companies, Inc. (NYSE:MMC), Yahoo! Inc. (NASDAQ:YHOO), and T MOBILE US INC (NYSE:TMUS). This group of stocks’ market caps are closest to BDX’s market cap.

As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $3.35 billion. That figure was $683 million in BDX’s case. Yahoo! Inc. (NASDAQ:YHOO) is the most popular stock in this table. On the other hand Marsh & McLennan Companies, Inc. (NYSE:MMC) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Becton Dickinson and Co (NYSE:BDX) is even less popular than MMC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.