Is Steris Plc (STE) Going to Burn These Hedge Funds?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Steris Plc (NYSE:STE).

Steris Plc (NYSE:STE) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. Steris Plc (NYSE:STE) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that STE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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David Blood of Generation Investment Management

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Do Hedge Funds Think STE Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STE over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

The largest stake in Steris Plc (NYSE:STE) was held by Generation Investment Management, which reported holding $600.8 million worth of stock at the end of December. It was followed by Select Equity Group with a $217.4 million position. Other investors bullish on the company included Echo Street Capital Management, Fisher Asset Management, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to Steris Plc (NYSE:STE), around 2.52% of its 13F portfolio. Welch Capital Partners is also relatively very bullish on the stock, setting aside 1.38 percent of its 13F equity portfolio to STE.

Seeing as Steris Plc (NYSE:STE) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few hedge funds that elected to cut their full holdings heading into Q2. Interestingly, Dmitry Balyasny’s Balyasny Asset Management cut the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $14.9 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $4.9 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 6 funds heading into Q2.

Let’s now take a look at hedge fund activity in other stocks similar to Steris Plc (NYSE:STE). We will take a look at Varian Medical Systems, Inc. (NYSE:VAR), Gartner Inc (NYSE:IT), NetApp Inc. (NASDAQ:NTAP), Monolithic Power Systems, Inc. (NASDAQ:MPWR), RLX Technology Inc. (NYSE:RLX), PTC Inc (NASDAQ:PTC), and Huntington Bancshares Incorporated (NASDAQ:HBAN). This group of stocks’ market values are closest to STE’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $1006 million. That figure was $1474 million in STE’s case. Varian Medical Systems, Inc. (NYSE:VAR) is the most popular stock in this table. On the other hand RLX Technology Inc. (NYSE:RLX) is the least popular one with only 23 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 42.1. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market by 6 percentage points. A small number of hedge funds were also right about betting on STE, though not to the same extent, as the stock returned 10.3% since the end of Q1 (through July 2nd) and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.