St. Jude Medical, Inc. (STJ): Insiders Aren’t Crazy About It

St. Jude Medical, Inc. (NYSE:STJ) has experienced a decrease in enthusiasm from smart money lately.

According to most stock holders, hedge funds are viewed as unimportant, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the moguls of this club, around 450 funds. Most estimates calculate that this group oversees most of the smart money’s total capital, and by watching their top equity investments, we have unearthed a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as important, bullish insider trading sentiment is another way to parse down the stock market universe. There are plenty of stimuli for an insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this method if you understand where to look (learn more here).

With these “truths” under our belt, let’s take a look at the key action regarding St. Jude Medical, Inc. (NYSE:STJ).

Hedge fund activity in St. Jude Medical, Inc. (NYSE:STJ)

Heading into Q2, a total of 27 of the hedge funds we track held long positions in this stock, a change of -7% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly.

According to our comprehensive database, John W. Rogers’s Ariel Investments had the biggest position in St. Jude Medical, Inc. (NYSE:STJ), worth close to $67.8 million, comprising 1.2% of its total 13F portfolio. On Ariel Investments’s heels is Phill Gross and Robert Atchinson of Adage Capital Management, with a $34.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Glenn Russell Dubin’s Highbridge Capital Management.

Due to the fact that St. Jude Medical, Inc. (NYSE:STJ) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies who were dropping their positions entirely in Q1. Intriguingly, Mark Kingdon’s Kingdon Capital cut the largest stake of the 450+ funds we watch, comprising about $7.2 million in stock., and SAC Subsidiary of CR Intrinsic Investors was right behind this move, as the fund sold off about $5.4 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds in Q1.

What do corporate executives and insiders think about St. Jude Medical, Inc. (NYSE:STJ)?

Insider buying is most useful when the company in question has seen transactions within the past 180 days. Over the latest half-year time period, St. Jude Medical, Inc. (NYSE:STJ) has experienced zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to St. Jude Medical, Inc. (NYSE:STJ). These stocks are Varian Medical Systems, Inc. (NYSE:VAR), Edwards Lifesciences Corp (NYSE:EW), Zimmer Holdings, Inc. (NYSE:ZMH), Smith & Nephew plc (ADR) (NYSE:SNN), and Boston Scientific Corporation (NYSE:BSX). This group of stocks belong to the medical appliances & equipment industry and their market caps match STJ’s market cap.

With the returns shown by the aforementioned time-tested strategies, retail investors must always watch hedge fund and insider trading sentiment, and St. Jude Medical, Inc. (NYSE:STJ) is no exception.

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