Was The Smart Money Right About Stryker Corporation (SYK)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Stryker Corporation (NYSE:SYK) and determine whether the smart money was really smart about this stock.

Stryker Corporation (NYSE:SYK) was in 46 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. SYK has seen a decrease in support from the world’s most elite money managers lately. There were 48 hedge funds in our database with SYK positions at the end of the second quarter. Our calculations also showed that SYK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a peek at the new hedge fund action surrounding Stryker Corporation (NYSE:SYK).

Michael Gelband of ExodusPoint Capital

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

At the end of the third quarter, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SYK over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fundsmith LLP was the largest shareholder of Stryker Corporation (NYSE:SYK), with a stake worth $1850.1 million reported as of the end of September. Trailing Fundsmith LLP was Fisher Asset Management, which amassed a stake valued at $784.8 million. Bridgewater Associates, Adage Capital Management, and OrbiMed Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fundsmith LLP allocated the biggest weight to Stryker Corporation (NYSE:SYK), around 5.12% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, designating 4.09 percent of its 13F equity portfolio to SYK.

Seeing as Stryker Corporation (NYSE:SYK) has experienced bearish sentiment from the smart money, logic holds that there were a few fund managers that decided to sell off their positions entirely by the end of the third quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling about $36.3 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also sold off its stock, about $6.2 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Stryker Corporation (NYSE:SYK) but similarly valued. These stocks are Atlassian Corporation Plc (NASDAQ:TEAM), Booking Holdings Inc. (NASDAQ:BKNG), GlaxoSmithKline plc (NYSE:GSK), Lockheed Martin Corporation (NYSE:LMT), Infosys Limited (NYSE:INFY), Prologis Inc (NYSE:PLD), and Zoetis Inc (NYSE:ZTS). This group of stocks’ market valuations resemble SYK’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 51 hedge funds with bullish positions and the average amount invested in these stocks was $3303 million. That figure was $3365 million in SYK’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 29 bullish hedge fund positions. Stryker Corporation (NYSE:SYK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SYK is 43.3. 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 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately, SYK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SYK investors were disappointed as the stock returned -5.7% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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