In this article we will analyze whether Steris Plc (NYSE:STE) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is STE stock a buy? Steris Plc (NYSE:STE) was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 40. STE shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 30 hedge funds in our database with STE holdings at the end of September. Our calculations also showed that STE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
David Siegel of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind let’s check out the key hedge fund action encompassing Steris Plc (NYSE:STE).
Do Hedge Funds Think STE Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in STE a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Steris Plc (NYSE:STE) was held by Select Equity Group, which reported holding $211.2 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $110 million position. Other investors bullish on the company included Echo Street Capital Management, Generation Investment Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Sandler Capital Management allocated the biggest weight to Steris Plc (NYSE:STE), around 2.08% of its 13F portfolio. Welch Capital Partners is also relatively very bullish on the stock, dishing out 1.46 percent of its 13F equity portfolio to STE.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in Steris Plc (NYSE:STE). Balyasny Asset Management had $14.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $4.9 million investment in the stock during the quarter. The other funds with brand new STE positions are Paul Tudor Jones’s Tudor Investment Corp, Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management, and Greg Eisner’s Engineers Gate Manager.
Let’s check out hedge fund activity in other stocks similar to Steris Plc (NYSE:STE). These stocks are Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), Occidental Petroleum Corporation (NYSE:OXY), Expeditors International of Washington (NASDAQ:EXPD), PerkinElmer, Inc. (NYSE:PKI), Quest Diagnostics Incorporated (NYSE:DGX), Nucor Corporation (NYSE:NUE), and KeyCorp (NYSE:KEY). All of these stocks’ market caps resemble STE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HZNP | 55 | 3793427 | -6 |
| OXY | 49 | 2151233 | 6 |
| EXPD | 25 | 477813 | -6 |
| PKI | 31 | 1978722 | -5 |
| DGX | 45 | 531778 | 3 |
| NUE | 29 | 138612 | 1 |
| KEY | 29 | 317740 | -4 |
| Average | 37.6 | 1341332 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $1341 million. That figure was $784 million in STE’s case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Expeditors International of Washington (NASDAQ:EXPD) is the least popular one with only 25 bullish hedge fund positions. Steris Plc (NYSE:STE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STE is 55.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and surpassed the market again by 0.4 percentage points. Unfortunately STE wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); STE investors were disappointed as the stock returned 2.3% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
