Were Hedge Funds Right About Becton, Dickinson and Company (BDX)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Becton, Dickinson and Company (NYSE:BDX) and determine whether hedge funds skillfully traded this stock.

Is Becton, Dickinson and Company (NYSE:BDX) worth your attention right now? The smart money was getting less bullish. The number of bullish hedge fund bets decreased by 1 recently. Becton, Dickinson and Company (NYSE:BDX) was in 51 hedge funds’ portfolios at the end of September. The all time high for this statistic is 65. Our calculations also showed that BDX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 52 hedge funds in our database with BDX holdings at the end of June.

William Von Mueffling of Cantillon Capital Management

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. With all of this in mind we’re going to take a look at the latest hedge fund action regarding Becton, Dickinson and Company (NYSE:BDX).

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

Heading into the fourth quarter of 2021, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BDX over the last 25 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

More specifically, Generation Investment Management was the largest shareholder of Becton, Dickinson and Company (NYSE:BDX), with a stake worth $932.8 million reported as of the end of September. Trailing Generation Investment Management was Cantillon Capital Management, which amassed a stake valued at $274.9 million. Impax Asset Management, Intermede Investment Partners, and Bridgewater Associates 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 Columbus Point allocated the biggest weight to Becton, Dickinson and Company (NYSE:BDX), around 6.67% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, designating 3.88 percent of its 13F equity portfolio to BDX.

Because Becton, Dickinson and Company (NYSE:BDX) has witnessed falling interest from hedge fund managers, it’s safe to say that there were a few money managers who sold off their entire stakes last quarter. Intriguingly, Terry Smith’s Fundsmith LLP dumped the biggest stake of the 750 funds watched by Insider Monkey, comprising close to $1052.7 million in stock, and Kenneth Tropin’s Graham Capital Management was right behind this move, as the fund dropped about $12.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Becton, Dickinson and Company (NYSE:BDX). These stocks are Edwards Lifesciences Corporation (NYSE:EW), Vale SA (NYSE:VALE), DoorDash, Inc. (NYSE:DASH), CME Group Inc (NASDAQ:CME), Cigna Corporation (NYSE:CI), Westpac Banking Corporation (NYSE:WBK), and Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR). This group of stocks’ market caps are closest to BDX’s market cap.

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 $3076 million. That figure was $2340 million in BDX’s case. CME Group Inc (NASDAQ:CME) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 6 bullish hedge fund positions. Becton, Dickinson and Company (NYSE:BDX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BDX is 66.3. 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. 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 still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on BDX as the stock returned 3.8% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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

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