Is Hill-Rom Holdings, Inc. (HRC) Going to Burn These Hedge Funds?

Is Hill-Rom Holdings, Inc. (NYSE:HRC) a bargain? The smart money is taking a bearish view. The number of long hedge fund bets were cut by 5 recently.

In the eyes of most shareholders, hedge funds are seen as slow, old investment vehicles of the past. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey hone in on the elite of this group, around 450 funds. It is estimated that this group oversees most of the smart money’s total capital, and by watching their highest performing investments, we have unsheathed a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as key, optimistic insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are many stimuli for an insider to cut shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this method if piggybackers understand where to look (learn more here).

With all of this in mind, it’s important to take a glance at the latest action encompassing Hill-Rom Holdings, Inc. (NYSE:HRC).

Hedge fund activity in Hill-Rom Holdings, Inc. (NYSE:HRC)

Heading into Q2, a total of 14 of the hedge funds we track held long positions in this stock, a change of -26% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Hill-Rom Holdings, Inc. (NYSE:HRC), worth close to $78.8 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, managed by Ken Fisher, which held a $64.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Cliff Asness’s AQR Capital Management, David Dreman’s Dreman Value Management and D. E. Shaw’s D E Shaw.

Judging by the fact that Hill-Rom Holdings, Inc. (NYSE:HRC) has witnessed declining sentiment from the smart money, it’s safe to say that there exists a select few funds that decided to sell off their full holdings last quarter. Interestingly, Noam Gottesman’s GLG Partners dropped the largest position of the “upper crust” of funds we monitor, totaling close to $9.9 million in stock.. Matthew Tewksbury’s fund, Stevens Capital Management, also sold off its stock, about $1.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds last quarter.

How are insiders trading Hill-Rom Holdings, Inc. (NYSE:HRC)?

Insider purchases made by high-level executives is best served when the company in focus has experienced transactions within the past six months. Over the latest six-month time period, Hill-Rom Holdings, Inc. (NYSE:HRC) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Hill-Rom Holdings, Inc. (NYSE:HRC). These stocks are Insulet Corporation (NASDAQ:PODD), HeartWare International Inc (NASDAQ:HTWR), West Pharmaceutical Services Inc. (NYSE:WST), Thoratec Corporation (NASDAQ:THOR), and Haemonetics Corporation (NYSE:HAE). This group of stocks belong to the medical instruments & supplies industry and their market caps match HRC’s market cap.