Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Boston Scientific Corporation (NYSE:BSX) investors should pay attention to an increase in hedge fund sentiment in recent months. Our calculations also showed that BSX isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s check out the latest hedge fund action encompassing Boston Scientific Corporation (NYSE:BSX).
How have hedgies been trading Boston Scientific Corporation (NYSE:BSX)?
At Q4’s end, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the previous quarter. On the other hand, there were a total of 40 hedge funds with a bullish position in BSX a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, OrbiMed Advisors was the largest shareholder of Boston Scientific Corporation (NYSE:BSX), with a stake worth $204.6 million reported as of the end of September. Trailing OrbiMed Advisors was Senator Investment Group, which amassed a stake valued at $194.4 million. Viking Global, Millennium Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, some big names have been driving this bullishness. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the most valuable position in Boston Scientific Corporation (NYSE:BSX). Polar Capital had $44.2 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $22.6 million position during the quarter. The other funds with new positions in the stock are Samuel Isaly’s OrbiMed Advisors, Lee Ainslie’s Maverick Capital, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Boston Scientific Corporation (NYSE:BSX) but similarly valued. We will take a look at Deere & Company (NYSE:DE), General Motors Company (NYSE:GM), The Estee Lauder Companies Inc (NYSE:EL), and America Movil SAB de CV (NYSE:AMX). This group of stocks’ market valuations are closest to BSX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DE | 47 | 2093476 | 10 |
| GM | 60 | 5275128 | -1 |
| EL | 33 | 1159461 | -3 |
| AMX | 12 | 244949 | 2 |
| Average | 38 | 2193254 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $2193 million. That figure was $1701 million in BSX’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand America Movil SAB de CV (NYSE:AMX) is the least popular one with only 12 bullish hedge fund positions. Boston Scientific Corporation (NYSE:BSX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on BSX, though not to the same extent, as the stock returned 13.8% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
