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Becton, Dickinson and Co. (BDX): Are Hedge Funds Right About This Stock?

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Becton, Dickinson and Co. (NYSE:BDX) shareholders have witnessed an increase in hedge fund sentiment lately.

Becton, Dickinson and Co. (NYSE:BDX)

To most traders, hedge funds are viewed as underperforming, outdated financial vehicles of the past. While there are over 8000 funds trading at present, we hone in on the masters of this club, around 450 funds. It is widely believed that this group oversees most of all hedge funds’ total capital, and by monitoring their best picks, we have identified a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as key, bullish insider trading sentiment is a second way to parse down the world of equities. There are a number of motivations for a corporate insider to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this method if piggybackers know what to do (learn more here).

With these “truths” under our belt, it’s important to take a glance at the latest action encompassing Becton, Dickinson and Co. (NYSE:BDX).

What does the smart money think about Becton, Dickinson and Co. (NYSE:BDX)?

At Q1’s end, a total of 27 of the hedge funds we track were bullish in this stock, a change of 13% from the first quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Generation Investment Management, managed by David Blood and Al Gore, holds the most valuable position in Becton, Dickinson and Co. (NYSE:BDX). Generation Investment Management has a $359.4 million position in the stock, comprising 7.3% of its 13F portfolio. On Generation Investment Management’s heels is Pzena Investment Management, managed by Richard S. Pzena, which held a $332.2 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Donald Yacktman’s Yacktman Asset Management, Ken Griffin’s Citadel Investment Group and Mario Gabelli’s GAMCO Investors.

As aggregate interest increased, key hedge funds have been driving this bullishness. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, established the most valuable position in Becton, Dickinson and Co. (NYSE:BDX). Healthcor Management LP had 57.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $11.4 million position during the quarter. The following funds were also among the new BDX investors: Anand Parekh’s Alyeska Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management, and Philippe Jabre’s Jabre Capital Partners.

How have insiders been trading Becton, Dickinson and Co. (NYSE:BDX)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time frame, Becton, Dickinson and Co. (NYSE:BDX) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Becton, Dickinson and Co. (NYSE:BDX). These stocks are DENTSPLY International Inc. (NASDAQ:XRAY), CareFusion Corporation (NYSE:CFN), C.R. Bard, Inc. (NYSE:BCR), Baxter International Inc. (NYSE:BAX), and Covidien plc (NYSE:COV). This group of stocks are the members of the medical instruments & supplies industry and their market caps match BDX’s market cap.

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